LATTER-DAY    PROBLEMS 


BOOKS  BY  J.  LAURENCE  LAUGHLIN 

PUBLISHED  BY  CHARLES  SCRIBNER'S  SONS 


Latter-Day  Problems.     Revised  and  En- 
larged Edition net  $1.50 

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LATTER-DAY  PROBLEMS 


BY 
J.  LAURENCE  LAUGHLIN,  Ph.D. 

Emeritus  Professor  of  Political  Economy  in 
the  University  of  Chicago 


REVISED 

AND 
ENLARGED    EDITION 


NEW  YORK 

CHARLES  SCRIBNER'S  SONS 
1917 


COPYRIGHT,  xgog,  10x7.  BY 
CHARLES  SCRIBNER'S  SONS 


o 
J 


TO 
MY  SISTER 


359284 


PREFACE 

No  apology  ought  to  be  made  for  presenting  to 
the  lay  public  a  series  of  studies  on  the  economic 
subjects  which  have  been  pressing  on  our  attention 
for  solution  in  these  latter  days.  It  is  certainly 
one  of  the  most  important  duties  of  the  economist 
to  present  the  results  of  scientific  work  in  such 
untechnical  language  that  they  may  be  understood 
by  all.  Indeed,  this  duty  is  the  more  required  in 
these  times  when  the  metaphysical  language  of 
most  recent  economic  treatises  makes  them  sealed 
books  to  all  but  a  very  few  experts.  But,  whatever 
the  attempt  at  clearness  and  simplicity  of  statement, 
it  need  not  follow  that  the  exposition  should  have 
no  scientific  value  to  the  economic  student;  for, 
so  far  as  the  author  has  been  able,  an  understand- 
ing of  the  fundamental  principles  of  economic  dis- 
tribution has  been  brought  to  the  analysis  of  these 
questions  of  the  day.  Obviously,  many  allied 
considerations  have  been  necessarily  omitted  in 
order  to  bring  the  main  points  at  issue  into  dis- 
tinct relief,  and  to  secure  that  brevity  which  would 
assure  a  reading  by  the  busy  man;  but  clearness 
and  brevity  could  be  arrived  at  only  by  an  insist- 

vii 


PREFACE 

ence  on  the  application  of  general  principles  to 
the  apparently  confusing  facts  of  a  modern  problem. 

Consequently,  in  the  first  six  chapters,  for  in- 
stance, a  consistent  system  of  economic  analysis 
ought  to  appear  throughout  the  seemingly  various 
topics.  They  deal  with  the  methods  to  be  applied 
for  an  improvement  in  the  condition  of  those 
classes  which  have  the  least  of  this  world's  goods, 
and  which  most  appeal  to  our  sympathies  and 
assistance.  Economics  is  not  to  be  regarded  as  an 
end  in  itself,  but  as  a  means  by  which  our  social 
conditions  may  be  most  thoroughly  analyzed,  to 
the  end  that  the  less  fortunate  shall  be  most  effi- 
ciently aided  and  obtain  permanent  improvement. 
Everything  should  be  welcomed  which  offers 
methods  of  treatment  able  to  relieve  us  from  the 
disappointing  conclusion  that,  after  untold  efforts 
of  mind  and  duty,  we  should,  fifty  years  from  now, 
be  applying  the  same  unsuccessful  policies  to  only 
a  larger  number  of  persons  in  need  of  help.  For 
this  general  purpose  these  chapters  have  been  pre- 
pared; but  no  claim,  of  course,  is  made  to  ex- 
haustive completeness  of  statement.  In  addition, 
it  has  seemed  high  time  to  try  to  dispose  of  the 
superficial  impression  that  the  scientific  results 
of  economics  are  out  of  harmony  with  the  funda- 
mental teachings  of  Christianity  and  ethics. 

While  examining  the  general  subject  of  value 
viii 


PREFACE 

my  attention  was  drawn  to  the  valuation  of  rail- 
ways, and  the  chapter  in  this  volume  on  that 
comparatively  unstudied  subject  was  the  result  of 
an  attempt  to  apply  general  principles  to  concrete 
conditions.  The  question  of  insurance  of  deposits 
has  entered  into  our  politics,  and  been  adopted 
in  several  States.  As  the  studies  on  that  subject 
have  been  asked  for  and  circulated  in  consider- 
able quantities  in  some  States,  it  has  seemed  well 
to  add  them  to  this  collection  in  book  form. 
Thus,  with  the  discussion  of  government  and 
bank-notes,  the  later  chapters  must  appeal  most 
to  the  banking  public,  while  the  earlier  chapters 
appeal  to  the  wider  constituency  who  wish  to  help 
the  poor  to  a  higher  level  of  comfort. 

I  am  under  obligations  to  the  Atlantic  Monthly, 
Scribner's  Magazine,  and  the  Journal  of  Political 
Economy  for  the  right  to  print  some  of  these 
chapters  in  book  form. 

J.  LAURENCE  LAUGHLIN. 


PREFACE  TO  REVISED  EDITION 

IN  order  to  secure  a  more  homogeneous  charac- 
ter to  this  treatment  of  social  questions,  it  seemed 
best  to  omit  the  last  three  chapters,  dealing  with 
banking  and  monetary  subjects,  and  to  add  five 
other  chapters  belonging  to  the  same  field  as  the 
first  seven.  The  whole  volume  in  its  new  form, 
therefore,  is  addressed  to  the  one,  although  large, 
constituency  which  is  looking  to  economics  for 
^id  in  solving  the  so-called  "social  problem." 

The  omitted  chapters  may  form  part  of  another 
volume  to  appear  later  containing  a  series  of 
"Monetary  Studies,"  dealing  mainly  with  the  ex- 
periences of  our  own  country. 

My  acknowledgments  are  due  to  the  Atlantic 
Monthly  for  the  right  to  publish  here  the  chapters 
on  "Women  and  Wealth,"  "Business  and  De- 
mocracy," and  "Monopoly  of  Labor";  to  the 
North  American  Review  that  on  "  Capitalism  and 
Social  Discontent";  and  to  the  University  of 
Chicago  Record  that  on  "Economic  Liberty," 
which  was  delivered  as  the  oration  at  the  Ninety- 
eighth  Convocation. 

J.  LAURENCE  LAUGHLIN. 

JAFFBEY,  N.  H.,  October,  1916. 


CONTENTS 

CHAPTER  XAGB 

I.    THE  HOPE  FOR  LABOR  UNIONS  .     .  i 

II.    SOCIALISM  A  PHILOSOPHY  OF  FAILURE         .  25 

III.  THE  ABOLITION  OF  POVERTY      .     .    „     .  56 

IV.  SOCIAL  SETTLEMENTS 88 

V.    POLITICAL  ECONOMY  AND  CHRISTIANITY    .  120 

VI.    LARGE  FORTUNES 155 

VII.    THE  VALUATION  OF  RAILWAYS  ....  177 

VIII.    WOMEN  AND  WEALTH 205 

IX.    MONOPOLY  OF  LABOR f    .  234 

X.    CAPITALISM  AND  SOCIAL  DISCONTENT    .     .  264 

XI.    BUSINESS  AND  DEMOCRACY    .   -.     .     .     .  297 

XII.    ECONOMIC  LIBERTY 324 

INDEX 357 


LATTER-DAY  PROBLEMS 

CHAPTER  I 
THE  HOPE  FOR  LABOR  UNIONS 


THE  difficulties  constantly  arising  between  em- 
ployers and  employees  and  the  increasingly 
aggressive  interference  of  labor  unions  with  indus- 
trial operations  have  brought  the  labor  problem  to 
the  front  as  never  before.  Here  is  a  matter  directly 
touching  the  public  welfare  which  cannot  be 
blinked;  it  must  be  squarely  met  and  its  solution 
must  be  worked  out  on  a  sound  economic  basis,  or 
we  shall  never  reach  any  substantial  results. 
More  than  this,  whatever  our  solution,  and  even  if 
we  arrive  at  positive  truth,  we  shall  yet  have  to 
face  the  difficulties  of  a  suspicious  mind  on  the 
part  of  those  whose  preconceptions  differ  from  our 
conclusions.  Indeed,  one  of  the  most  serious  duties 
of  practical  economists  is  so  to  wing  the  truth  by 
publicity  that  it  may  enter  the  thinking  of  all  classes 
and  conditions  of  men. 


LATTER-DAY  PROBLEMS 

To  this  end,  it  will  be  worth  our  while  to  examine 
the  principles  and  practice  of  labor  unions  solely  in 
the  interest  of  the  men  who  make  up  their  member- 
ship. We  may  leave  the  employer  out  of  account 
in  this  study,  if  for  no  other  reason  than  that  he  is 
the  one  who,  by  situation,  intelligence,  and  experi- 
ence, is  generally  able  to  care  for  himself.  This 
reason,  obviously,  does  not  apply  to  the  receiver  of 
wages,  who  is  now  using  the  union  as  an  organiza- 
tion for  raising  his  wages  as  well  as  for  lessening  the 
duration  and  improving  the  conditions  of  his  daily 
toil.  First  of  all,  it  should  be  understood  that  we 
make  no  objection  to  organized  unions.  They 
have  their  unmistakable  advantages,  as  well  as 
their  disadvantages.  The  friend  of  the  workman 
certainly  should  wish  to  study  how  to  increase  the 
gains  and  diminish  the  losses  from  unions.  In  this 
spirit  it  ought  to  be  possible  to  study  impartially 
and  honestly  any  and  all  defects  in  the  principles  on 
which  labor  unions  are  based.  If  the  defects  dis- 
closed are  obvious  and  important,  then  it  would  be 
stupid  for  society  to  ignore  them;  and  the  econo- 
mist may  be  rightly  called  upon,  as  a  consequence, 
to  propose  a  constructive  means  for  remedying  the 
shortcomings  of  the  unions  to  the  end  that  their 
efficiency  may  be  increased.  Beginning  first  with 


THE  HOPE  FOR  LABOR  UNIONS 

a  critical  analysis  of  the  present  policy  of  the  main 
body  of  labor  unionists,  it  will  be  my  purpose  to 
follow  this  with  a  constructive  plan  by  which  the 
laborers  may  improve  their  condition  through  the 
agency  of  the  unions. 

ii 

Accepting  the  aims  of  the  labor  organizations  as 
above  described,  what  are  the  means  used  to  accom- 
plish these  aims  ?  With  this  purpose  all  of  us  who 
are  human  must  sympathize;  all  of  us  wish  to  see 
poverty  reduced  and  the  wages  of  the  worker 
raised.  There  can  be  no  disagreement  on  this 
point.  The  real  question  at  issue,  however,  is, 
How  can  these  results  be  brought  about  ?  On  this 
point,  it  ought  not  to  be  necessary  to  say  that  we 
must  divest  ourselves  of  all  stubborn  pride  of  opin- 
ion, and  look  the  facts  squarely  in  the  face.  Nor 
can  any  system  of  ethics  be  maintained  for  a  mo- 
ment which,  although  based  on  sympathy,  is  not 
founded  securely  upon  sound  economic  principles. 
If  the  unions  also  have  built  up  a  theory  of  class 
ethics  which  aims  to  justify  conduct  squarely  op- 
posed to  the  established  order  of  society,  and  a  con- 
duct based  on  mistaken  economic  theory,  then  that 
code  of  ethics  must  go  to  the  wall.  Moreover,  it 

3 


LATTER-DAY  PROBLEMS 

will,  in  that  case,  be  to  the  permanent  good  of  the 
workers  that  it  should  give  way  to  some  other  code. 

What,  then,  are  the  means  adopted  by  the  unions 
to  raise  wages?  Obviously,  it  is  not  possible  to 
predicate  in  one  statement  what  is  true  of  all  unions. 
There  are  many  differing  practical  policies  in  force; 
and  yet  it  is  possible  to  indicate  the  one  common 
economic  principle  underlying  the  action  of  the 
majority  of  the  large  and  influential  organizations. 
To  be  brief,  the  practical  policy  of  labor  unions  is 
based  on  the  principle  of  a  monopoly  of  the  supply 
of  laborers  in  a  given  occupation.  By  combina- 
tion also  the  gain  of  collective  bargaining  is  ob- 
tained. Just  as  manufacturers  attempt  to  control 
the  supply  and  the  price  of  an  article,  so  the  unions 
attempt  to  fix  the  rate  of  wages  by  controlling  the 
number  of  possible  competitors  for  hire.  It  would 
seem  that  what  is  sauce  for  the  goose  should  be 
sauce  for  the  gander. 

The  principle  of  monopoly,  it  should  be  observed, 
is  effective  in  regulating  price  only  if  the  monopoly 
is  fairly  complete;  it  must  include  practically  all  of 
the  supply.  But  even  under  these  conditions  the 
price  cannot  be  settled  alone  by  those  who  control 
the  supply.  The  demand  of  those  who  buy  is 
equally  necessary  to  the  outcome.  As  a  rule,  the 

4 


THE  HOPE  FOR  LABOR  UNIONS 

monopolistic  seller  must  set  a  price  which  will  in- 
duce the  demand  to  take  off  the  whole  supply. 
Too  high  a  price  will  lessen  consumption  and  lessen 
demand. 

In  a  similar  way,  not  only  must  there  be  an  active 
demand  for  labor  from  employers,  but  to  fix  the 
price  of  labor  a  union  must  control  practically  all  of 
a  given  kind  of  labor.  Here  we  find  the  pivotal 
difficulty  in  the  policy  of  the  unions;  and  we  find 
clashes  of  opinion  as  to  the  facts.  If  the  union  does 
not  contain  all  the  persons  competing  for  the  given 
kind  of  work,  then  its  theory  of  monopoly  will  be  a 
failure  in  practice.  In  fact,  the  unions  composed 
of  unskilled  laborers,  such  as  teamsters,  can  never 
include  all  the  persons,  near  and  far,  capable  of 
competing  for  their  positions.  The  principle  of 
monopoly  cannot  be  made  to  work  successfully  in 
such  unions. 

But  it  will  be  objected  by  union  leaders  that  it  is 
their  policy  to  gather  every  laborer  into  the  union, 
and  thus  eventually  control  all  the  supply  in  an  in- 
vincible monopoly.  The  unions,  however,  do  not, 
in  fact,  admit  all  comers.  Some  of  them,  such  as  the 
machinists,  admirably  demand  skill  as  a  prerequisite 
of  admission ;  others,  such  as  telegraphers,  make  the 
admission  of  apprentices  practically  impossible; 

5 


LATTER-DAY  PROBLEMS 

while  others  again,  like  some  woodworkers,  find 
difficulty  in  getting  apprentices,  and  consequently 
urge  training  in  the  public  schools.  In  such 
variety  of  practice  there,  nevertheless,  emerges  the 
fact  that  many  unions  try  to  create  an  artificial 
monopoly  by  excluding  others,  and  yet  try  to  keep 
the  union  scale  of  wages  by  preventing  in  various 
ways  the  employment  of  non-union  men.  On  the 
other  hand,  should  the  unions  adopt  the  plan  of 
admitting  all  who  apply,  then  all  laborers  being 
unionists,  the  situation  would  be  the  same  as  re- 
gards supply  as  if  there  were  no  unions.  Could 
the  unions  then  maintain  a ' '  union  scale  "  of  wages  ? 
Evidently,  if  the  whole  supply  of  laborers  is  thus 
introduced  into  the  field  of  employment,  then  the 
rate  of  wages  for  all  in  any  one  occupation  can 
never  be  more  than  that  rate  which  will  warrant  the 
employment  of  all — that  is,  the  market  rate  of 
wages.  Although  all  laborers  are  included  in  the 
unions,  they  would  have  the  advantages,  whatever 
they  may  be,  of  collective  bargaining.  Yet  if  the 
unions  really  believe  that  when  every  laborer  is 
inside  the  union  collective  bargaining  can  of  itself, 
irrespective  of  the  supply,  raise  the  rate  of  wages, 
they  are  doomed  to  disappointment.  Wholly  aside 
from  the  influence  of  demand,  in  order  to  control 

6 


THE  HOPE  FOR  LABOR  UNIONS 

the  rate  of  wages,  the  unions  which  include  all 
laborers  must  effectually  control  immigration  and 
the  rate  of  births.  No  one,  it  scarcely  need  be  said, 
is  so  ignorant  of  economic  history  as  to  believe  that 
such  a  control  over  births  can  be  maintained. 
There  is  little  hope  for  higher  wages  by  this  method 
of  action. 

In  the  anthracite-coal  regions,  for  instance,  it 
may  be  said  that  strenuous  efforts  were  made  to 
force  all  the  men  to  join  the  unions.  If  not  only 
those  on  the  ground,  but  all  newcomers,  are  ad- 
mitted to  membership,  then  not  all  unionists  can 
find  employment  in  the  mines.  At  the  best,  if  they 
can  fix  the  rate  of  wages  which  employers  must  pay 
those  who  do  work,  some  will  remain  unemployed. 
In  such  a  case,  the  working  members  must  support 
the  idle — which  is  equivalent  to  a  reduction  of  the 
wages  of  those  who  work — or  the  unemployed  must 
seek  work  elsewhere.  Sooner  or  later,  for  men 
capable  of  doing  a  particular  sort  of  work  an  ad- 
justment as  a  whole  between  the  demand  for  labor- 
ers and  the  supply  of  them  must  be  reached  on  the 
basis  of  a  market  rate. 

Whatever  the  reasons,  the  fact  is  to-day  unmis- 
takable that  the  unions  include  only  a  small  frac- 
tion of  the  total  body  of  laborers.  In  spite  of  the 

7 


LATTER-DAY  PROBLEMS 

proclaimed  intention  to  include  in  a  union  each 
worker  of  every  occupation,  and  then  to  federate  all 
the  unions,  the  unions  contain  far  less  than  a  majority 
of  the  working  force  of  the  country.  To  the  present 
time,  therefore,  the  practical  policy  of  the  unions 
has  resulted  in  one  of  artificial  monopoly;  that  is,  not 
able  to  control  the  whole  supply,  the  union  attempts 
to  fix  a  "union  scale"  and  maintain  only  its  own 
members  at  work.  This  situation,  consequently, 
means  always  and  inevitably  the  existence  of  non- 
union men,  against  whom  warfare  must  be  waged. 
Under  this  system  high  wages  for  some  can  be  ob- 
tained only  by  the  sacrifice  of  others  outside  the 
union.  The  economic  means  chosen  by  the  unions, 
then,  to  gain  higher  wages  are  practicable  only  for 
a  part  of  the  labor  body,  and  then  only  provided  all 
other  competitors  can  be  driven  from  the  field.  The 
policy  of  artificial  monopoly  being,  thus,  the  com- 
mon principle  of  a  great  majority  of  unions,  we 
may  next  briefly  consider  the  inevitable  conse- 
quences of  such  a  policy. 

i.  The  immediate  corollary  of  the  union  policy 
is  a  warfare  a  outrance  against  non-union  men. 
This  hostility  against  brother  workers  is  excused  on 
the  ground  that  it  is  the  only  means  of  keeping  up 
the  "union  scale "  of  wages.  Although  an  artificial 

8 


THE  HOPE  FOR  LABOR  UNIONS 

monopoly  is  unjust  and  selfish,  and  certain  to  end 
in  failure,  the  unions  have  doggedly  adhered  to  it 
so  far  as  to  create  a  code  of  ethics  which  justifies 
any  act  which  will  preserve  the  monopoly.  This 
is  the  reason  why  a  non-union  man  seeking  work 
is  regarded  as  a  traitor  to  his  class,  when  in  real- 
ity he  is  a  traitor  to  an  insufficient  economic  prin- 
ciple. As  a  human  being  he  has  the  same  right 
to  live  and  work  as  any  other,  whether  a  member 
of  a  union  or  not.  The  arrogance  of  unionism  in 
ruling  on  the  fundamentals  of  human  liberty, 
the  assumption  of  infallibility  and  superiority  to 
institutions  which  have  been  won  only  by  cen- 
turies of  political  sacrifice  and  effort,  is  some- 
thing supernal — something  to  be  resented  by 
every  lover  of  liberty.  Unionism,  if  unjust  to 
other  men,  cannot  stand. 

2.  Since  the  "union  scale"  of  an  artificial  mo- 
nopoly is  clearly  not  the  market  rate  of  wages,  the 
maintenance  of  the  former  can  be  perpetuated  only 
by  limiting  the  supply  to  the  members  of  the  union. 
The  only  means  of  keeping  non-union  men  from 
competition  is  force.  Consequently,  the  inevitable 
outcome  of  the  present  policy  of  many  labor  organi- 
zations is  lawlessness  and  an  array  of  power  against 
the  state.  Their  policy  being  what  it  is,  their  pur- 

9 


LATTER-DAY  PROBLEMS 

poses  can  be  successfully  carried  out  only  by  force, 
and  by  denying  to  outsiders  the  privileges  of 
equality  and  liberty.  Sometimes  the  means  of  en- 
forcing their  unenacted  views  is  known  as  "peace- 
ful picketing";  but  this  is  only  a  mask  for  threats 
of  violence.  In  fact,  intimidation  of  all  kinds  up  to 
actual  murder  has  been  employed  to  drive  non- 
union competitors  out  of  the  labor  market.  Pick- 
eting, boycotts,  breaking  heads,  slugging,  murder, 
— all  outrages  against  law  and  order,  against 
a  government  of  liberty  and  equality — are  the 
necessary  consequences  of  the  existing  beliefs 
of  unionists,  and  they  cannot  gain  their  ends 
without  them.  So  long  as  the  unions  adhere  to 
their  present  principles  so  long  will  they  be 
driven  to  defy  the  majesty  of  the  law,  and  work 
to  subvert  a  proper  respect  for  the  orderly  con- 
duct of  government. 

The  dictum  of  a  few  men  in  a  union  has  been  set 
above  the  equality  of  men  before  the  law.  The 
union  lays  down  an  ethical  proposition,  and  by  its 
own  agencies  sets  itself  to  apply  it  at  any  and  all 
cost.  This  is  a  method  of  tyranny  and  not  of 
liberty.  The  right  of  the  humblest  person  to  be 
protected  in  his  life  and  property  is  the  very  corner- 
stone of  free  government.  It  means  more  for  the 

10 


THE  HOPE  FOR  LABOR  UNIONS 

weak  than  for  the  strong.  Therefore  the  opinions 
of  a  loosely  constituted  body,  representing  a  limited 
set  of  interests,  should  not — and  will  not — be 
allowed  to  assume  a  power  greater  than  the  polit- 
ical liberty  for  all,  rich  or  poor,  which  has  been 
a  thousand  years  in  the  making.  By  the  abuses 
of  unionism  there  has  been  set  up  an  imperium 
in  imperio — one  inconsistent  with  the  other.  One 
or  the  other  must  give  way.  Which  one  it  shall 
be  no  one  can  doubt.  The  dictum  of  rioters  will 
never  be  allowed  by  modern  society  to  eradicate 
the  beneficent  results  which  have  issued  from 
the  long  evolution  of  civil  liberty.  If  the  plat- 
form of  the  unions  is  opposed  to  the  funda- 
mentals of  law  and  progress,  it  must  yield  to  the 
inevitable  and  be  reconstructed  on  correct  prin- 
ciples of  economics  and  justice. 

3.  The  labor  leaders,  finding  themselves  opposed 
by  the  strong  forces  of  society,  have  at  times  made 
use  of  politics.  They  have  sought  to  influence 
executive  action  in  their  favor.  Mayors  of  cities 
are  under  pressure  not  to  use  the  police  to  maintain 
order  when  strikers  are  intimidating  non-union 
men.  More  than  that,  since  the  presence  of  sol- 
diers would  secure  safety  from  force  to  non-union 
workers,  union  leaders  have  urged  governors,  and 

ii 


LATTER-DAY  PROBLEMS 

even  the  President  of  the  United  States,  to  refrain 
from  sending  troops  to  points  where  disorderly 
strikes  are  in  operation.  Not  only  the  police  and 
the  soldiery,  but  even  the  courts,  when  used 
solely  to  enforce  the  law  as  created  by  the  ma- 
jority of  voters,  have  been  conspicuously  at- 
tacked as  the  enemies  of  "organized  labor." 
The  hostility  of  these  agencies  in  truth  is  not 
toward  labor,  or  its  organization,  but  toward 
the  perverse  and  misguided  policy  adopted  by 
the  labor  leaders. 

The  entry  of  unions  into  politics,  in  general,  is  a 
sign  of  sound  growth.  It  is,  at  least,  a  recognition 
that  the  only  legitimate  way  of  enforcing  their  opin- 
ions upon  others  is  by  getting  them  incorporated 
into  law  by  constitutional  means.  And  yet  legisla- 
tion in  favor  of  special  interests  will  be  met  by  the 
demand  of  equal  treatment  for  all  other  interests 
concerned;  and  in  this  arena  the  battle  must  be 
fought  out.  The  unions  will  not  have  their  own 
way  by  any  means.  So  far  as  concerns  the  rate  of 
wages,  in  any  event,  political  agitation  and  legisla- 
tion can  do  little.  The  forces  governing  the  de- 
mand and  supply  of  labor  are  beyond  the  control 
of  legislation.  But  other  subjects  of  labor  legisla- 
tion have  been  introduced,  as  is  well  known,  such 

12 


THE  HOPE  FOR  LABOR  UNIONS 

as  eight-hour  laws,  high  wages  for  state  employees, 
and  demands  for  employment  by  the  Government 
of  only  union  men.  All  these  efforts  would  be 
largely  unnecessary  were  the  action  of  the  unions 
founded  on  another  principle  than  monopoly. 

4.  The  difficulties  arising  from  this  incorrect 
policy  of  artificial  monopoly  of  the  labor  supply 
have  been  felt  by  the  unions,  but  they  have  not  been 
assigned  to  their  true  cause.  Believing  in  this 
theory,  even  though  incorrect,  they  have  gone  on 
enforcing  their  demands  by  methods  unrelated  to 
the  real  causes  at  work.  They  have  tried  to 
strengthen  their  position  by  claiming  a  share  in  the 
ownership  of  the  establishment  in  which  they  work, 
or  a  right  of  property  in  the  product  they  produce, 
or  a  part  in  the  business  management  of  the  concern 
which  employs  them.  They  have  tried  to  say  who 
shall  be  hired,  who  dismissed,  where  materials  shall 
be  bought,  by  whom  goods  shall  be  carried  or  sold, 
and  the  like.  Their  purpose  is  not  always  clear; 
but  it  seems  to  be  a  part  of  a  plan  to  keep  the  em- 
ployer at  their  mercy,  and  thus  under  the  necessity 
of  submitting  to  any  and  all  demands  as  regards 
wages. 

In  this  matter  the  unions  cannot  succeed.  The 
very  essence  of  a  defined  rate  of  wages  is  that  the 


LATTER-DAY  PROBLEMS 

laborer  contracts  himself  out  of  all  risk.  If  the 
workman  claims  to  be  a  partner  in  the  commercial 
enterprise,  asking  in  addition  a  part  of  the  gains, 
he  must  also  be  willing  to  share  the  losses.  This 
is  obviously  impossible  for  the  ordinary  working 
man.  Hired  labor  and  narrow  means  go  together. 
Capital  can,  labor  cannot,  wait  without  serious  loss. 
Laborers,  therefore,  cannot  take  the  risks  of  in- 
dustry and  assume  the  familiar  losses  of  business. 
This  is  the  full  and  conclusive  reason  why  the 
laborer  contracts  himself  out  of  risk  and  accepts  a 
definite  rate  of  wages.  If  he  does  this,  he  is 
estopped,  both  morally  and  legally,  from  further 
proprietary  claims  on  the  product  or  on  the  estab- 
lishment. 

By  way  of  resume,  it  is  to  be  seen  that  the  attempt 
to  increase  the  income  of  labor  on  the  unionist  prin- 
ciple of  a  limitation  of  competitors  has  led  into  an 
impasse,  where  further  progress  is  blocked  by  the 
following  evils: 

1.  The  wrong  to  non-union  men. 

2.  The  defiance   of  the   established   order  of 
society. 

3.  A  futile  resort  to  legislation. 

4.  The  interference  with  the  employer's  man- 
agement. 

14 


THE  HOPE  FOR  LABOR  UNIONS 

ni 

In  contrast  with  the  existing  policy,  which  can 
end  only  in  discouragement  and  failure,  permit  me, 
wholly  in  the  interest  of  the  membership  of  the 
unions,  to  suggest  another  policy  which  will  cer- 
tainly end  in  higher  wages  and  open  a  road  to 
permanent  progress  for  all  working  men.  In- 
stead of  the  principle  of  monopoly  of  compet- 
itors, I  offer  the  principle  of  productivity  or 
efficiency,  as  a  basis  on  which  the  action  of 
unions  should  be  founded. 

By  productivity  is  meant  the  practical  ability  to 
add  to  the  product  turned  out  in  any  industry. 
The  relative  productivity  of  labor  operates  on  its 
price  just  as  does  utility  on  the  price  of  any  staple 
article — improve  the  quality  of  it  and  you  increase 
the  demand  for  it.  This  general  truth  is  nothing 
new.  The  purchaser  of  a  horse  will  pay  more  for  a 
good  horse  than  for  a  poor  one.  A  coat  made  of 
good  material  will  sell  for  more  than  one  made  of 
poor  material.  Why  ?  Because  it  yields  more  utility, 
or  satisfaction,  to  the  purchaser.  In  the  same  way, 
if  the  utility  of  the  labor  to  the  employer  is  in- 
creased, it  will  be  more  desired;  that  is,  if  the 
laborer  yields  more  of  that  for  which  the  employer 

15 


LATTER-DAY  PROBLEMS 

hires  labor,  the  employer  will  pay  more  for  it,  on 
purely  commercial  grounds. 

Now  it  happens  that  where  productivity  is  low — 
that  is,  where  men  are  generally  unskilled — the 
supply  is  quite  beyond  the  demand  for  that  kind  of 
labor.  Productivity  being  given,  supply  regulates 
the  price.  Obviously,  to  escape  from  the  thraldom 
of  an  oversupply  of  labor  in  any  given  class,  or  occu- 
pation, the  laborer  must  improve  his  efficiency. 
That  is  another  way  of  saying  that,  if  he  trains  him- 
self and  acquires  skill,  he  moves  up  into  a  higher 
and  less  crowded  class  of  labor.  The  effect  on 
wages  is  twofold:  (i)  he  is  now  in  a  group  where 
the  supply  is  relatively  less  to  demand  than  before; 
and  (2)  his  utility  as  a  laborer  to  the  employer  is 
greater,  and  acts  to  increase  the  demand  for  his 
services.  Productivity,  therefore,  is  the  one  sure 
method  of  escape  from  the  depressing  effects  on 
wages  of  an  oversupply  of  labor. 

It  is  unnecessary  to  describe  in  detail  the  forms 
by  which  productivity  shows  itself  in  the  concrete. 
If  the  laborer  is  a  teamster,  he  can  improve  in  so- 
briety, punctuality,  knowledge  of  horses,  skill  in 
driving,  improved  methods  of  loading  and  unload- 
ing, avoidance  of  delays,  and  in  scrupulous  honesty. 
If,  moreover,  he  studies  his  employer's  business  and 

16 


THE  HOPE  FOR  LABOR  UNIONS 

consults  his  interest — instead  of  studying  how  to 
put  him  at  a  disadvantage,  or  instead  of  making 
work — he  still  further  increases  his  productivity 
and  value  to  his  employer.  In  other  occupations 
and  in  other  grades  of  work  the  process  is  simple. 
In  fact,  it  is  the  ordinary  influence  of  skill  on  wages; 
and  men  have  been  acting  on  an  understanding  of 
it  time  out  of  mind. 

To  this  suggestion  it  may  be  objected  that  the 
workman  who  makes  himself  more  efficient  re- 
ceives no  more  from  an  employer  than  the  less 
efficient;  that  employers  treat  all  alike  and  are  un- 
willing to  recognize  skill.  The  fact  is  doubted; 
for  it  is  incredible  that  intelligent  managers  should 
be  for  any  length  of  time  blind  to  their  own  self- 
interest.  But  if  they  are  thus  blind,  and  if  they 
place  an  obstacle  to  the  recognition  of  merit  and 
skill,  then  we  at  once  see  how  the  unions  can  make 
legitimate  use  of  their  organized  power  by  de- 
manding higher  wages  for  higher  productivity. 
Such  demands  are  sure  to  meet  with  success. 

This  method  of  raising  wages,  based  on  forces 
bringing  about  a  lessened  supply  and  an  increased 
demand,  shows  a  difference  as  wide  as  the  poles'from 
the  existing  artificial  method  of  " bucking"  against 
an  oversupply  by  an  ineffective  monopoly.  To  the 

17 


LATTER-DAY  PROBLEMS 

laborer  who  wishes  higher  wages  the  advantage  of 
the  former  over  the  latter  is  so  evident  and  so  great 
that  further  illustration  or  emphasis  on  this  point 
would  be  out  of  place.  In  the  economic  history  of 
the  last  fifty  or  sixty  years  in  the  United  States  and 
Great  Britain  it  appears  that  money  wages  have 
risen  by  about  fifty  per  cent,  for  unskilled  labor 
to  over  one  hundred  per  cent,  for  higher  grades  of 
work,  while  the  hours  of  labor  per  day  have  been 
lowered  considerably.  Moreover,  this  gain  in 
money  wages  has  been  accompanied  by  a  fall  in  the 
prices  of  many  articles  consumed  by  the  laboring 
class.  This  fortunate  outcome  has  gone  on  simul- 
taneously with  a  progress  in  invention  and  in  the 
industrial  arts  never  before  equalled  in  the  history 
of  the  world,  and  it  is  a  progress  which  has  enabled 
the  same  labor  and  capital  to  turn  out  a  greater 
number  of  units  of  product.  In  fact,  the  enlarge- 
ment of  the  output  has  been  such  that  each  unit 
could  be  sold  at  a  lower  price  than  ever  before  and 
yet  the  value  of  the  total  product  of  the  industry 
has  sufficed  to  pay  the  old  return  upon  capital  and 
also  to  pay  absolutely  higher  money  wages  to  the 
workmen  for  a  less  number  of  hours  of  labor  in  the 
day.  Indeed,  one  is  inclined  to  believe  that  the 
gain  in  wages  by  the  working  classes  in  recent  years 

18 


THE  HOPE  FOR  LABOR  UNIONS 

has  been  due  far  more  to  this  increased  productivity 
of  industry  and  much  less  to  the  demands  of  labor 
unions  than  has  been  generally  supposed.  The 
productivity  method  of  raising  wages  has  the  ad- 
vantage over  the  one  in  present  use  in  that  it  gives 
a  quid  pro  quo,  and  excites  no  antagonism  on  the 
part  of  the  employer.  A  pressure  by  strikes  to 
have  productivity  recognized  must  be  successful, 
since  an  employer  cannot  afford  the  loss  conse- 
quent on  hiring  an  inefficient  workman.  The  in- 
sistence, as  at  present,  on  a  uniform  minimum  rate 
of  wages  by  process  of  terrorism,  and  without  re- 
gard to  the  supply  of  possible  competitors,  cannot 
for  a  moment  be  considered  in  comparison  with  the 
hopeful  and  successful  method  through  improved 
productivity.  The  one  is  outside,  the  other  within, 
the  control  of  any  individual  initiative. 

Keeping  these  things  in  mind,  those  of  us  who 
would  like  to  see  a  definite  and  permanent  progress 
of  the  laboring  classes  believe  that  here  the  unions 
have  a  great  opportunity.  They  must  drop  their 
dogged  attempts  to  enforce  a  policy  against  the 
oversupply  of  labor  by  a  futile  monopoly;  it  is  as 
useless  and  hopeless  as  to  try  to  sweep  back  the  sea 
with  a  broom.  On  the  other  hand,  should  the 
unions  demand  as  conditions  of  admission  definite 

19 


LATTER-DAY   PROBLEMS 

tests  of  efficiency  and  character,  and  work  strenu- 
ously to  raise  the  level  of  their  productivity,  they 
would  become  limited  bodies,  composed  of  men  of 
high  skill  and  efficiency.  The  difficulty  of  supply 
would  be  conquered.  A  monopoly  would  be 
created,  but  it  would  be  a  natural  and  not  an  arti- 
ficial one.  The  distinction  between  union  and  non- 
union men  would,  then,  be  one  between  the  skilled 
and  the  unskilled.  The  contest  between  union  and 
non-union  men  would  no  longer  be  settled  by  force. 
Thus  the  sympathy  of  employers  and  the  public 
would  be  transferred  from  the  non-union,  or  the 
unfit,  to  the  union,  or  the  fit  men.  If  space  were 
sufficient,  interesting  cases  could  be  cited  here  of 
unions  which  have  already  caught  sight  of  the  truth, 
and  greatly  improved  their  position  thereby.  This 
policy  unmistakably  opens  the  path  of  hope  and 
progress  for  the  future. 

In  contrast  with  the  mistaken  policy  of  the  pres- 
ent, we  may  set  down  the  different  ways  in  which 
productivity  would  act  upon  the  four  evils  enu- 
merated at  the  end  of  the  second  part  of  our  study: 

i.  The  wrong  to  the  non-union  man  would  dis- 
appear. The  rivalry  erf  union  and  non-union  men 
would  no  longer  be  the  competition  of  equals,  be- 
cause the  non-union,  or  inferior,  men  would  be  out 

20 


THE  HOPE  FOR  LABOR  UNIONS 

of  the  competition  for  given  kinds  of  work.  There 
is  no  wrong  to  a  non-union  man  if  he  is  excluded 
from  work  for  inefficiency.  The  wrong  of  to-day 
is  that  the  union  often  shields  numbers  of  inca- 
pables. 

2.  Since  the  unionists  would  represent  skill,  and 
the  non-unionists  lack  of  skill,  there  would  be  no 
need  of  force  to  hold  the  position  of  natural  mo- 
nopoly.   The  perpetual  defiance  of  the  law  in  order 
to  terrorize  non-union  men  would  have  no  reason 
for  its  existence;  and  the  worst  phase  of  unionism 
would  disappear.    Such  a  consummation  alone 
would  be  worth  infinite  pains;   but  if  it  should 
come  in  connection  with  a  policy  which  is  morally 
certain  to  improve  the  condition  of  the  workmen, 
not  to  reach  out  for  it  is  little  short  of  crime. 

3.  As  another  consequence  of  the  new  principle 
the  unionist  would  find  himself  and  his  comrades 
steadily  gaining  a  higher  standard  of  living  without 
resort  to  the  artificial  methods  of  politics.    Legis- 
lation would  not  be  needed  to  fight  against  the  re- 
sults of  the  oversupply  of  labor.    Like  ordinary 
business  men,  the  unionists  would  find  their  affairs 
peacefully  settled  in  the  arena  of  industry  by  per- 
manent forces,  and  not  in  the  uncertain  strife  of 
legislatures  and  political  conventions,  in  which  they 

21 


LATTER-DAY  PROBLEMS 

are  likely  to  be  outwitted  by  clever  party  leaders. 
And  yet  the  workmen  would  retain  in  their  organ- 
ized unions  the  power  to  command  justice  from 
those  employers  who  are  unjust. 

4.  The  new  policy  would  insure  community  of 
interest  between  employer  and  employee.  This 
objective  is  so  important,  it  has  been  soj  outra- 
geously ignored  in  countless  labor  struggles,  that  to 
attain  it  would  almost  be  like  the  millennium;  and 
yet,  instead  of  being  moonshine,  it  is  simple  com- 
mon sense.  If  the  laborers  knew  and  acted  upon 
the  fact  that  skill  and  good-will  were  reasons  why 
employers  could  pay  better  wages,  the  whole  face 
of  the  present  situation  would  be  changed.  If  it 
were  objected  that  the  unfair  and  grasping  em- 
ployer would  pocket  the  surplus  due  to  the  im- 
proved efficiency  of  the  laborers,  it  must  be  re- 
membered that  the  unions  still  retain  their  power 
of  collective  bargaining.  But,  of  course,  the 
unions  must  not  believe  that  demands  can  be  made 
for  advances  of  an  unlimited  kind  far  beyond  the 
services  rendered  to  production  of  any  one  agent, 
such  as  labor. 

The  new  proposals  would  also  completely  re- 
move the  disastrous  tendency  to  make  work.  If 
men  obtain  payment  in  proportion  to  their  produc- 

22 


THE  HOPE  FOR  LABOR  UNIONS 

tivity,  the  greater  the  product  the  higher  would  be 
the  wages;  for  this  has  been  the  reading  of  eco- 
nomic history,  no  matter  how  individuals  here  and 
there  protest.  Hence  the  result  would  be  lower 
expenses  of  production,  a  fall  in  the  prices  of  staple 
goods,  and  a  generally  increased  welfare  among 
those  classes  whose  satisfactions  have  been  in- 
creased. 

Not  only  would  the  consumer  be  benefited,  but 
the  increased  productivity  of  industry  would  enable 
the  home  producer  to  sell  his  goods  cheaper  in 
foreign  markets.  As  things  are  going  now,  the 
hindrances  to  production  and  making  work  by 
unions  are  the  serious  influences  now  threatening 
to  contract  our  foreign  trade.  The  new  policy  pro- 
posed to  the  unions  would  therefore  aid  the  United 
States  in  keeping  its  present  advantages  in  the  field 
of  international  competition. 

While  it  has  been  impossible  to  discuss  fully  all 
the  points  which  may  have  arisen  in  the  reader's 
mind,  it  must  suffice  to  bring  into  bold  contrast  the 
present  erroneous  policy  of  the  labor  unions  with 
the  possible  one  of  productivity.  In  a  very  true 
sense,  the  labor  problem  is  a  conflict  between 
different  grades  of  skill.  Legitimate  industrial 
success  comes  with  the  ability  to  use  better  than 

23 


LATTER-DAY  PROBLEMS 

others  the  agencies  of  production.  One  reason 
why  managerial  power  commands  such  high  wages 
is  that  a  highly  capable  leader  in  industry  receives 
returns  not  merely  for  the  use  of  capital,  but  because 
he  sees  and  grasps  an  opportunity  where  other  men 
see  nothing.  No  matter  where  a  man  begins  in 
life,  if  he  has  skill,  insight,  foresight,  judgment, 
knowledge  of  men,  and  managerial  force,  he  will 
gain  at  least — if  not  more  than — in  proportion  to 
his  productivity.  Therefore,  if  the  unions  wish  to 
elevate  their  fellow-workers,  instead  of  breaking 
the  heads  of  non-union  men,  they  should  set  a  pre- 
mium on  industrial  education.  It  ought  to  be  as 
easy  for  a  working  man's  child  to  become  a  skilled 
craftsman — a  machinist,  carpenter,  mason,  or 
bricklayer — in  our  public-school  system  as  it  is  to 
acquire  geography  and  algebra.  By  eradicating 
industrial  incapacity  and  substituting  skill  therefor, 
we  should  be  increasing  the  wages  of  all  classes, 
developing  wealth  in  all  forms,  and  enlarging  the 
well-being  of  the  whole  nation. 


CHAPTER  II 
SOCIALISM  A  PHILOSOPHY  OF  FAILURE 


IT  is  impossible  not  to  sympathize  with  many  of 
the  purposes  of  socialism.  Looked  at  sym- 
pathetically, its  objective  propositions  are  the  re- 
sult of  a  state  of  mind  rather  than  of  a  logical 
system  of  thought;  and  one  cannot  be  indifferent 
to  this  state  of  mind.  To  be  sure,  it  is  a  matter  of 
temperament  rather  than  of  reason;  but  one  has 
an  honoring  sense  of  respect  for  those  who,  having 
listened  to  the  songs  of  the  sirens,  have  no  desire 
ever  to  return  to  the  land  of  humdrum.  By  this 
one  means  to  express  the  idea  that  socialists  are 
primarily  idealists,  and  that  they  have  arrived  at 
their  land  of  dreams  by  the  highway  of  idealism; 
and  that  it  is  precisely  because  they  are  idealists 
that  they  are  ever  wishing  to  escape  the  sordid  re- 
quirements of  a  world  largely  built  upon  bourgeois 
virtues.  Thus  it  results  that,  as  an  idealistic  ex- 
pression of  what  life  might  be,  it  appeals  strongly 

25 


LATTER-DAY  PROBLEMS 

to  the  latent  idealism  in  all  of  us — especially  to 
those  who  for  one  reason  or  another  find  ourselves 
little  endowed  with  material  wealth,  and  who  wish 
the  opportunity  for  leisure,  and  for  enjoyment  ac- 
cording to  our  tastes.  Whatever  our  level  of 
education  or  intelligence,  we  are  all  of  us  striving 
to  get  the  means  of  enjoying  that  which  seems  to 
each  of  us  the  most  attractive  way  of  spending  our 
time.  To  the  most  of  the  working  men  it  is  a  desire 
for  freedom  from  constant  grinding  manual  labor; 
and  to  mental  laborers,  it  is  a  desire  to  escape  from 
nervous  strain  and  anxiety,  and  to  have  leisure  for 
enjoyment. 

Thus,  while  socialism  appeals  to  an  almost  uni- 
versal longing  in  human  nature,  it  has,  on  the 
other  hand,  the  obvious  and  inevitable  inconsist- 
encies of  a  theory  detached  from  the  tyrannical 
rule  of  fact.  While  idealizing  the  possibilities  of 
human  nature  to  suit  an  a  priori  conception  of  life, 
until  this  poor  human  nature  is  fairly  unrecogniz- 
able, socialism  proposes,  as  one  means  to  its  end, 
to  obliterate  the  effects  of  existing  conditions  by 
the  removal  of  competition  in  the  struggle  for 
material  existence.  That  is,  it  suggests  material 
means  to  bring  about  ideal  conditions.  It  does 
not  primarily  put  its  emphasis  on  the  improvement 

26 


SOCIALISM  A  PHILOSOPHY  OF  FAILURE 

of  human  nature,  but  upon  a  change  in  the  dis- 
tribution of  material  wealth.  The  socialists  are 
seemingly  not  concerned  in  building  up  an  Altruria 
where  the  only  end  is  goodness  and  where  satisfac- 
tions are  only  spiritual.  It  is  what  seems  to  them 
the  unequal  distribution  of  material  possessions 
which  causes  them  to  criticise  existing  society. 
Throughout  socialistic  literature  there  is  the  well- 
known  insistence  upon  the  materialistic  interpre- 
tation of  history — a  conception  based  upon  a  hun- 
ger for  things  of  material  enjoyment,  and  for  more 
and  more  of  them.  Fundamentally,  they  have  as 
much  centred  their  aim  on  an  increase  in  material 
possessions  as  the  veriest  Napoleon  of  finance 
in  Wall  Street.  An  existence  in  which  the  ac- 
quisition of  more  material  wealth  is  of  very  large 
— if  not  of  chief — importance  is  in  the  thoughts 
of  both. 

The  ends  sought  for  by  the  socialists  are  not,  in 
effect,  different  from  those  of  the  mass  of  non- 
socialists  who  are  striving  to  acquire  wealth  in  order 
to  have  ease  and  leisure  for  enjoyment.  Agreeing 
in  their  aims,  their  differences — which  seem  to 
most  persons  to  place  them  as  wide  apart  as  the 
poles — really  consist  in  choosing  different  means  of 
accomplishing  their  ends.  The  ordinary  hustler 

27 


LATTER-DAY  PROBLEMS 

for  wealth,  without  or  within  the  stock  market, 
may  have  no  definite  moral  restraint  except  the 
fear  of  the  law  (in  fact,  he  may  even  contrive  to 
escape  the  law),  and  he  accepts  existing  institu- 
tions; but  he  plans  to  gain  his  end,  if  honest,  by 
productive  processes  and  trade;  or,  if  dishonest,  by 
a  thousand  ingenious  ways  of  transferring  to  him- 
self the  wealth  created  by  others.  On  the  other 
hand,  the  socialist  proposes  to  overturn  industrial 
competition  and  the  institution  of  private  property 
in  the  hope — vaguely  outlined  and  not  economi- 
cally analyzed — of  transferring  the  use  of  wealth 
from  those  who  have  to  those  who  have  not.  If 
he  does  not  now  have  wealth,  from  whom  is  he 
expecting  to  get  it,  when  socialism  has  come  to  its 
own  ?  Possibly  he  has  a  dreamy  belief  that  wealth 
can  be  created  and  maintained  in  existence  by  the 
public  will,  and  should  be  equally  distributed  like 
water  from  a  municipal  reservoir.  Clearly  enough, 
while  planning  for  a  more  even  distribution  of 
wealth,  the  essence  of  socialism  is  to  be  found  in  the 
means  which  it  proposes  for  accomplishing  an  end 
desired  by  most  of  us.  In  brief,  the  means  are  the 
abolition  of  competition  and  of  private  property. 
By  these  tools  the  fabric  of  idealism  is  to  be  builded 
in  the  future  land  of  dreams. 

28 


SOCIALISM  A  PHILOSOPHY  OF  FAILURE 

II 

Some  evidence  as  to  the  truth  of  the  observation 
that  socialism  is  the  outcome  of  a  state  of  mind, 
rather  than  of  a  logical  system  of  thought,  is,  to  my 
mind,  to  be  found  in  the  failure  of  the  socialists  to 
recognize  the  actual  conditions  under  which  we  are 
forced  to  live  on  this  globe.  It  is  characteristic  of 
devotees  of  any  system  based  more  or  less  on  feel- 
ing to  be  so  absorbed  in  a  priori  and  agreeable 
theorizing  as  to  be  utterly  oblivious  to  the  actual 
and  disagreeable  facts  of  our  daily  existence. 
Grant  that  we  all  wish  the  comforts  and  satisfac- 
tions which  material  wealth  gives,  we  are  obliged  to 
face  the  real  question,  no  matter  how  bald  and  dis- 
agreeable it  may  be:  How  can  we  get  possession 
of  this  wealth  ?  Leaving  fraud,  robbery,  and  force 
aside,  by  what  methods  can  men  produce  and  pos- 
sess material  wealth  in  a  free  country  like  ours, 
which  is  unburdened  by  a  feudal  system  and  in 
which  life  and  property  are  protected?  Is  it  not 
possible  that,  at  this  point,  the  socialists  have  omit- 
ted to  consider  some  matters  of  fact  which  can  be 
observed  by  any  one  ?  Indeed,  have  they  been  quite 
fair  with  themselves,  in  passing  by  considerations 
— which  we  may  here  proceed  to  point  out? 

29 


LATTER-DAY  PROBLEMS 

In  the  first  place,  we  can  get  our  material  satis- 
factions only  by  producing  them  in  the  ways  set  by 
the  conditions  of  life  on  this  globe.  These  are  of  a 
kind  not  to  be  lightly  brushed  aside.  We  are  not 
living  on  Mars.  On  this  planet,  the  earth  yields 
its  products  only  on  terms  which  require  ability  to 
overcome  and  use  the  forces  of  nature;  to  foresee 
and  discount  the  future,  and  to  collect  present 
goods  in  order  to  gain  a  larger  future  product  in 
operations  requiring  a  considerable  period  of  time; 
to  use  human  effort  both  manual  and  mental;  and 
to  devise  means  by  which  the  co-operation  of  all 
these  powers  may  be  united  for  the  most  efficient 
conduct  of  industry.  No  matter  whether  we  like  it 
or  not,  the  actual  wealth  in  existence  to-day — 
whether  distributed  unjustly  or  not — has  come  into 
being  only  by  the  operation  of  these  forces.  De- 
stroy, or  minimize,  any  one  of  them,  and  the  total 
sum  of  material  well-being  will  be  reduced.  As  to 
this  point  there  will  be  little  difference  of  opinion 
between  socialists  and  non-socialists. 

But  it  will  be  retorted  that,  although  wealth  is 
produced  only  by  the  above  painful  processes,  the 
acquisition  of  wealth — or  its  distribution  after  it  is 
produced — is  mainly  unjust;  that  it  is  the  illegiti- 
mate acquisition  of  the  world's  great  output  of 

30 


SOCIALISM  A  PHILOSOPHY  OF  FAILURE 

wealth  which  is  the  true  cause  of  the  belief  that 
the  existing  system  of  society  is  out  of  joint.  If, 
however,  we  admit  the  general  conditions  only 
under  which  wealth  can  be  produced,  we  must 
also  be  ready  to  assign  distributive  shares  to 
those  who  have  contributed  the  forces,  or  means, 
necessary  to  bringing  the  wealth  into  existence. 
We  may  grant  that  not  all  wealth  is  to-day  the 
property  of  those  who  have  gone  through  the  ef- 
forts and  sacrifices  of  production;  but  it  still 
remains  true  that  wealth — no  matter  who  owns 
it — is  turned  out  only  by  the  exercise  of  what 
are  sometimes  slightingly  dubbed  the  bourgeois 
virtues.  It  still  remains  true  that  the  existing 
income  of  society  depends  upon  the  exercise  of 
the  qualities  of  effort,  sacrifice,  patience,  persist- 
ence, courage,  honesty,  integrity,  truthfulness,  skill, 
thrift,  application,  foresight,  judgment,  common- 
sense,  business  honor,  long  experience,  observation 
of  men's  wants,  precise  information,  knowledge  of 
human  nature,  capacity  for  managing  men,  execu- 
tive ability,  and  organizing  power.  Any  man  who 
has  had  business  experience  knows  this  to  be  true. 
Yet,  the  socialist  may  grant  all  this;  he  may  admit 
that  wealth  can  be  produced  only  under  the  severe 
conditions  just  described;  but  he  may  rest  his 


LATTER-DAY  PROBLEMS 

whole  case  on  the  claim  that  this  wealth  is  unjustly 
distributed.  No  doubt,  the  state  of  mind  which  in 
these  days  is  called  socialistic  arises  from  a  belief 
that  the  present  competitive  system  of  industry  in- 
evitably causes  inequality  of  possessions  and  in- 
justice in  the  distribution  of  what  is  produced. 
Hence  the  central  point  in  the  socialist  philosophy 
is  a  demand  for  the  abolition  of  competition  and  a 
recourse  to  State  control. 

m 

In  all  fairness,  we  must  recognize  that  things 
economic  are  not  perfect;  that  human  beings  do 
not  always  do  what  is  right  and  just;  and  that  we 
must  accomplish  our  industrial  work  on  this  globe 
with  faulty  men.  Looking  at  the  matter  thus,  we 
find  much  to  sympathize  with  in  the  fundamental 
causes  which  stir  the  socialists  to  action.  They 
find  things  wrong,  and  they  have  set  to  work  with 
burning  zeal  to  make  them  right.  In  this  desire  of 
theirs  to  improve  the  world  every  one  must  sym- 
pathize. Without  radicals  to  break  up  wrongs  to 
which  we  have  grown  accustomed  we  shall  have 
little  progress.  Conservatism  is  too  often  the  ref- 
uge of  unjust  privilege.  The  only  question,  there- 
fore, in  regard  to  socialism  is:  Is  it  a  means  appro- 

32 


SOCIALISM  A  PHILOSOPHY  OF  FAILURE 

priate  to  the  end  ?  Let  us  face  the  matter  calmly 
as  practical  men.  Many  schemes,  from  the  times 
of  the  crusades  to  the  present  day,  have  been  de- 
vised for  making  the  world  better.  We  have  had 
many  Utopias  pressed  upon  us.  In  the  one  par- 
ticular scheme  known  as  socialism,  the  remedy  pro- 
posed is  the  abolition  of  competition  and  private 
property.  Will  this  remedy  remove  the  ills  of 
which  society  is  sick? 

At  the  outset  we  must  face  the  fact  of  the  im- 
perfection of  human  nature.  With  or  without 
socialism  this  fact  remains;  it  cannot  be  dodged. 
Is  socialism,  like  Christianity,  a  proposed  means  of 
changing  the  ethics  of  the  human  race?  On  the 
contrary,  it  is  based  on  a  materialistic  conception 
of  life.  It  proposes  a  change  in  externals,  in  the 
forms  of  society,  as  a  means  of  eliminating  evils 
which  have  their  roots  in  faulty  human  nature.  It 
is,  so  to  speak,  an  insistence  on  only  partial — not 
complete — changes  in  environment  as  the  sole 
power  to  cause  a  recrystallization  of  human  mind 
in  a  new  ethical  form.  Socialism  obviously  pro- 
poses no  practical  process  for  changing  the  ele- 
ments of  human  nature;  invariably  the  reforming 
spirit  of  socialism  is  taken  up  with  the  detailed 
schemes  which  for  the  time  seem  to  need  a  cure. 

33 


LATTER-DAY  PROBLEMS 

One  does  not  need  to  be  a  socialist  to  help  reform 
any  particular  existing  abuse.  Consequently,  un- 
less socialism  can  modify  the  essential  elements  of 
imperfect  human  nature — and  modify  it  not  in  a 
few  instances,  but  in  the  whole  mass  of  men — it 
cannot  in  itself  expect  to  relieve  the  world  of  any 
injustice  in  the  distribution  of  property  due  either 
to  the  inequality  or  iniquity  of  men.  Unless 
socialism  can  convince  us  that  merely  by  the  aboli- 
tion of  competition  and  private  property  there 
would  be  created  a  new  and  fundamental  virtue  in 
human  nature,  there  would  be  no  reason  to  look 
upon  it  as  anything  more  than  another  of  the  well- 
meant  but  useless  panaceas  proposed  by  emotional 
reformers. 

Since  imperfect  human  nature,  the  bad  mixed 
with  the  good,  is  absolutely  certain  to  remain  much 
the  same  under  socialism  as  under  existing  society, 
what  can  the  socialist  expect  to  gain  by  the  removal 
of  competition?  Will  inequalities  in  ability  and 
power  be  unknown?  Of  course  not.  Then,  will 
inequalities  of  reward  be  unknown?  Of  course 
not.  Under  any  legitimate  system  of  production 
men  will  show  unequal  industrial  powers.  Some 
are  energetic,  others  lazy;  some  are  quick,  others 
are  dull;  some  are  thrifty,  others  are  wasteful; 

34 


SOCIALISM  A  PHILOSOPHY  OF  FAILURE 

some  are  born  organizers,  others  are  born  to  follow; 
only  a  few  are  leaders  of  men,  while  the  masses  are 
inevitably  managed  by  the  few.  Consequently, 
under  any  form  of  society,  we  are  certain  to  have 
as  many  different  results  from  industrial  effort  as 
there  are  kinds  of  men.  Inequalities  of  wealth  are 
logical,  not  abnormal.  While  some  men — no 
doubt  high-minded,  artistic,  or  creative — are  fail- 
ures in  accumulating  wealth,  others — possibly  of 
less  value  for  the  improvement  of  society — are  suc- 
cessful in  gaining  large  fortunes.  It  depends  on 
the  aim  in  life.  If  wealth  is  the  only  test  of  success, 
then  the  world  is  indeed  out  of  joint. 

As  a  cure  for  the  ills  of  this  world,  however, 
socialism  proposes  a  scheme — whether  practical  or 
not  is  not  here  the  question — based  on  a  change  in 
the  possession  of  material  wealth.  That  is,  will 
the  spending  of  more  money  directly  lead  to  the 
improvement  of  character?  All  history,  and  the 
present  conduct  of  our  richer  classes,  seem  to  show 
that  greater  self-indulgence  followed  by  a  weaken- 
ing of  fibre,  with  a  lowered  moral  purpose,  are  the 
inevitable  results  of  unrestrained  expenditure. 
This  holds  true,  in  spite  of  the  theory  that,  by 
equalizing  the  expenditure  of  all  classes,  the  poor 
would  be  elevated  in  the  moral  scale  by  having 

35 


LATTER-DAY  PROBLEMS 

more  to  expend,  and  that  the  wrong-doing  of  the 
rich  would  be  reduced  by  taking  away  the  power 
of  self-indulgence.  It  cannot  be  overlooked  that 
human  nature  is  much  the  same  in  all  classes.  In- 
creased expenditure  in  itself  will  not  provide  the 
character  to  govern  the  spending;  so  that  self- 
indulgence  will  be  only  transferred.  Clearly,  an 
increase  of  material  rewards — while  a  gain  to  those 
already  having  a  moral  sense — would  give  only 
wider  play  to  the  existing  defects  of  human  nature. 
If  spending  is  made  possible  to  those  who  have  not 
earned  it,  deterioration  is  inevitable.  What  we 
should  hope  to  see  instituted  is  a  proper  means  of 
increasing  the  productive  efficiency  of  those  who 
have  little,  so  that  their  opportunity  for  enlighten- 
ment may  be  larger  without  the  destruction  of 
fibre. 

The  radical  weakness  of  socialism  is  in  its  at- 
tempt to  coin  idealism  out  of  materialism.  In  the 
proposed  abolition  of  competition  and  private 
property,  socialism  would  take  away  most  of  the 
present  incentives  to  energy  and  productivity. 
More  than  that,  it  stakes  everything  on  the  assump- 
tion that  a  partial  change  in  external  environment 
— such  as  would  be  produced  only  by  the  disappear- 
ance of  competition  and  private  property — would 

36 


SOCIALISM  A  PHILOSOPHY  OF  FAILURE 

overcome  all  the  faults  of  human  nature  which  now 
disturb  our  social  content.  To  take  a  child  away 
from  its  surroundings  in  infancy,  although  it  may 
not  remove  its  hereditary  nature,  may  establish 
new  habits  which  will  influence  its  conduct;  but 
socialism  does  not  provide  for  any  such  extended 
removals.  People  are  to  be  left  in  the  same  general 
environment,  while,  of  all  the  varied  conditions  of 
life,  only  competition  and  private  property  are  to  be 
removed.  Is  there  any  such  virtue  in  the  abolition 
of  these  two  as  will  reform  all  human  nature  ?  That 
it  will  we  have  no  evidence  but  the  glorious  hopes 
of  the  enthusiasts. 

Since  the  socialist  grieves  at  the  unequal  dis- 
tribution of  material  wealth,  and  regards  a  better 
distribution  as  essential  to  the  reformation  of 
society,  one  is  obliged  to  ask  at  once  why  the  so- 
cialist does  not  himself  set  to  work  and  accumulate 
wealth  as  well  as  others  ?  In  our  country  there  are 
hundreds  of  thousands,  if  not  millions,  of  cases 
where  men  have  begun  with  nothing  and  accumu- 
lated a  competence.  Why  do  not  the  socialists  do 
the  same  ?  If  material  wealth  is  the  cure-all,  why 
not  go  in  at  once  and  get  it  ?  The  answer  is  not 
far  to  seek.  They  claim  that  they  have  no  chance 
of  success  in  the  competitive  struggle  with  others. 

37 


LATTER-DAY  PROBLEMS 

They  wish  wealth,  but  they  do  not  possess  the 
bourgeois  virtues  necessary  for  its  acquisition  under 
existing  conditions.  Therefore,  they  wish  to  re- 
arrange society  so  that  those  who  do  not  now  have 
the  industrial  qualities  may  obtain  wealth  as  well  as 
those  who  do  have  them.  Of  course,  they  do  not 
explain  who  is  to  produce  the  wealth  they  are  to 
share,  and  which  they  are  incompetent  to  produce. 
That  is  supposedly  an  insignificant  detail.  How- 
ever this  may  be,  the  central  point  in  the  question 
is  this:  having  admitted  their  failure  to  achieve 
success  in  accumulating  material  wealth  in  a  com- 
petitive struggle  open  freely  to  all,  they  propose  the 
abolition  of  free  competition.  State  control  is  to 
take  its  place.  Here  we  have  socialism  confess- 
edly as  a  philosophy  of  failure.  Just  to  the  extent 
that  the  socialists  insist  on  their  inability  to  accu- 
mulate as  much  wealth  as  others,  under  existing 
conditions,  they  are  unconsciously  advertising 
their  own  industrial  inefficiency.  They  clamor 
for  a  philosophy  of  failure — for  a  system  in  which 
they  shall  be  relieved  from  the  inevitable  results  of 
their  relative  inferiority  in  obtaining  the  material 
means  which  they  regard  as  essential  to  their  ideal- 
istic ends.  Those  resort  to  it  who  are  unequal  to 
the  competitive  struggle  and  to  the  survival  of  the 

38 


SOCIALISM  A  PHILOSOPHY  OF  FAILURE 

fittest  in  gaining  material  wealth.  For  instance, 
if  Harvard  were  always  victorious  over  Yale  in 
foot-ball,  and,  if,  then,  Yale  should  propose  an 
existence  in  which  there  should  be  no  foot-ball, 
Yale  would  be  generally  regarded  as  having  failed, 
in  that  particular  sport,  in  holding  her  own  on 
equal  terms.  She  would  be  regarded  as  having 
fallen  back  on  a  philosophy  of  failure.  But  it 
would  still  not  prevent  Yale  men  from  gaining  suc- 
cess in  other  things  than  foot-ball.  Likewise,  it 
should  be  observed  that  gaining  other  things  than 
wealth,  such  as  character  and  lofty  conduct,  has 
little  or  no  emphasis  in  the  philosophy  of  socialism. 
In  short,  the  appeal  to  socialism  is  an  appeal 
against  the  inequality  and  imperfection  inherent  in 
human  beings;  and  the  ineradicable  weakness  of 
socialism  is  that  it  charges  upon  the  external  forms 
of  society  what  should  be  charged  upon  poor  human 
nature.  Only  too  often,  socialists  seem  to  be  in- 
capable of  seeing  this  gap  in  their  logic. 

In  spite  of  all  this  elementary  truth,  every  one  is 
aware  that  a  stimulus  to  the  socialist  propaganda 
is  found  in  the  constant  iteration  upon  special 
privileges  obtained  under  present  conditions. 
Vehement  assault  is  made  upon  the  grant  of  legis- 
lative favors  and  monopolies  by  which  some  per- 

39 


LATTER-DAY  PROBLEMS 

sons  are  believed  to  have  accumulated  great  wealth 
at  the  public  expense.  Therefore,  say  the  socialists, 
abolish  competition  and  private  property.  Any 
system  is  wrong,  they  say,  which  permits  any  one 
man  to  accumulate  a  colossal  fortune.  Yet  here 
is  an  obvious  non  sequitur.  Grant  that  these 
wrongs  are  as  they  are  represented;  yet  it  does  not 
follow  that  we  need  to  change  the  forms  of  society 
to  rid  ourselves  of  the  evils.  On  calm  examination, 
this  criticism  of  society,  as  it  now  goes  on,  seems  to 
be  directed  not  against  the  intention  and  purpose 
of  modern  society,  but  against  the  failure  to  carry 
out  the  intention  and  purpose  of  society  as  now 
expressed  in  existing  institutions.  If  it  is  the  gen- 
eral intention  not  to  allow  injustice,  there  is  noth- 
ing, as  things  are  now,  to  prevent  the  public  from 
carrying  out  its  intention.  The  remedy  for  these 
wrongs,  granting  their  existence,  is  to  be  found, 
therefore,  not  in  the  destruction  and  reconstruction 
of  society,  but  in  the  active  co-operation  of  all  well- 
meaning  men  in  enforcing  the  admitted  purposes 
and  capabilities  of  the  existing  forms  of  society. 
That  is,  equality  of  treatment  before  the  law  and 
equal  justice  in  the  courts  are  entirely  the  outcome 
of  public  opinion.  If  public  op'nion  does  not  de- 
mand them,  socialism  may  pass  resolves  until  the 

40 


SOCIALISM  A  PHILOSOPHY  OF  FAILURE 

crack  of  doom  without  accomplishing  anything. 
The  only  real  remedy  for  such  ills  is  always  in  the 
hands  of  society  as  it  now  exists.  If  they  are 
allowed  to  go  on,  it  is  because  men  are  indifferent; 
not  because  the  forms  of  society  through  which  they 
act  are  necessarily  inadequate. 

Moreover,  the  touch-and-go  way  of  proposing 
to  topple  over  the  long-established  institutions  of 
society  because  some  things  are  not  done  as  we  like 
is  another  evidence  of  the  emotional  and  unpene- 
trating  methods  of  some  modern  reformers.  These 
institutions  are  the  growth  and  outcome  of  the  very 
inner  nature  of  mankind ;  and  this  has  been  con- 
firmed by  the  instincts  which  have  been  created  by 
the  long-continued  existence  of  these  institutions. 
For  ages  men  have  been  working  out  representa- 
tive and  local  self-government  solely  by  dint  of  the 
experience  of  the  race,  and  not  by  the  light  of  any 
a  priori  theory  of  the  dreamers.  This  is  the  teach- 
ing of  the  whole  history  of  free  and  constitutional 
government.  We  have  come  where  we  are  to-day 
solely  because,  in  free  countries  like  ours,  we  have 
succeeded  in  repressing  inequality  due  to  injustice, 
tyranny  and  force.  In  truth,  great  accumulations 
of  capital  were  never  possible  until  equality  and 
justice  of  treatment  were  secured  to  all.  The 


LATTER-DAY  PROBLEMS 

socialist  side-steps  the  essential  lesson  drawn  from 
the  political  development  of  the  race — chiefly  be- 
cause  he  finds  that  men  are  not  yet  perfect.  It  is 
no  argument  against  the  existing  forms  of  society 
that  absolutely  perfect  justice  and  equality  are  not 
always  obtained.  Present  institutions  reflect  fairly 
well  the  qualities  of  erring  human  nature.  Only 
as  a  race  grows  in  ethical  standards  will  its  institu- 
tions respond.  The  cause  of  change  must  be  in 
the  qualities  of  man  and  not  in  the  institutions 
which  grow  out  of  those  qualities.  Frail  human 
nature  cannot  be  made  perfect  by  the  limited  pro- 
gramme of  socialism,  any  more  than  a  frog  can  be 
made  to  grow  fur  by  legislation.  The  detachment 
of  socialism  from  the  facts  of  life  is  here  again  ap- 
parent. Present  society  is  what  it  is,  historically  and 
evolutionally,  solely  because  it  is  conditioned  by  the 
very  human  nature  given  to  us  to  work  with  on  this 
planet.  It  is  absurd  to  reason  as  if  we  were  perfect 
angels  in  a  perfect  paradise.  Socialism  is  a  dream  of 
perfection  suited  only  for  a  perfected  human  nature. 

IV 

Yet  the  more  practical  of  the  socialists  may  with 
propriety  reply  that  the  conditions  of  living  on  this 
planet  do  not  oblige  society  to  give  special  oppor- 

42 


SOCIALISM  A  PHILOSOPHY  OF  FAILURE 

tunities  to  some  and  deny  them  to  others;  that 
society  can  do  as  it  pleases  with  the  free  gifts  of 
nature;  and  that  private  property  is  not  necessary 
to  securing  the  highest  efficiency  and  happiness  of 
man.  There  is  force  in  this  criticism.  There  is 
no  divine  right  in  private  property;  it  is  a  creature 
of  the  social  will.  It  has  come  into  existence  by 
the  consent  of  society,  and  is  what  it  is  as  the  out- 
come of  the  experience  of  the  race.  It  is  not  an 
accident;  it  is  an  expression  of  the  wishes  of  the 
race  as  they  have  been  developed  by  time  and  evo- 
lution. It  is  with  us  because  men  believe,  for 
good  or  for  ill,  that  the  institution  has  best  served 
their  purposes  through  many  centuries.  It  re- 
mains, and  will  remain,  solely  because  men  believe 
that  they  get  more  good  than  evil  out  of  it.  It  is 
not  pretended  that  imperfect  human  beings  will 
make  out  of  private  property  in  land  an  institution 
so  perfect  in  every  respect  that  no  one  in  all  condi- 
tions will  meet  with  inconvenience  or  unequal 
opportunity.  Even  though  there  are  things  which 
weigh  against  it,  enormous  gains  have  come  from 
private  property,  which  send  the  scales  down  in  its 
favor.  It  has  given  a  stimulus  to  effort,  thrift,  and 
improvement  of  the  soil  by  the  owner  which  could 
never  have  been  known  under  a  temporary  tenure. 

43 


LATTER-DAY  PROBLEMS 

All  scientific  rotation  of  crops,  all  planting  of 
orchards,  all  drainage  of  land,  all  permanent 
buildings  and  fixtures,  all  improvements  which  be- 
came incorporated  with  the  soil,  all  lasting  private 
docks,  all  costly  business  structures  in  the  midst 
of  great  cities,  all  railway  investments  of  private 
capital — all  these  would  be  made  impossible  with- 
out the  expectation  of  permanent  possession  im- 
plied in  the  private  ownership  of  land.  And  the 
recent  transfer  of  ownership  to  former  Irish  ten- 
ants, which  has  admittedly  brought  out  new  thrift 
and  industry,  is  a  practical  testimony  to  the  magic 
of  private  property  in  land.  Lasting  improve- 
ments on  ground-rents  are  made  possible  only  by 
a  tenure  so  long  as  practically  to  give  possession 
during  the  life  of  the  improvement  and  for  sev- 
eral generations  of  improvers.  To  the  intelligence 
of  society  as  a  whole  these  are  preponderating 
advantages. 

This  justification  of  the  action  of  the  race,  as 
shown  in  the  institution  of  private  property  in  land, 
does  not  imply  that  no  disadvantages  exist  when 
the  matter  is  carried  to  an  extreme.  Under  the 
general  protection  to  private  property  a  man  may 
so  accumulate  and  control  land  as  to  work  a  dis- 
advantage to  society;  he  may  keep  vast  tracts  out 

44 


SOCIALISM  A  PHILOSOPHY  OF  FAILURE 

of  cultivation,  to  the  damage  of  others.  Hence, 
just  as  soon  as  the  act  of  any  one  person  infringes 
on  the  rights  of  others,  society  would  have  a  right 
to  interfere.  In  South  America,  especially  on  the 
west  coast,  the  Indians  of  a  low  order  of  civiliza- 
tion have  possession  of  a  large  part  of  the  land. 
The  suggestion  there  comes  from  those  who  are 
well-to-do  and  intelligent  to  dispossess  the  ignorant 
native  of  the  soil  in  the  interest  of  progress  and 
greater  productivity.  With  us  the  suggestion  of 
limiting  private  property  comes  from  the  proleta- 
riat. Whoever  may  be  the  offender,  it  lies  in  the 
power  of  society  to  preserve  the  general  mass  of 
gains  from  the  institution,  and  yet  to  establish 
rules  by  which  the  disadvantages  may  be  mini- 
mized. If  so,  it  would  be  unnecessary  to  resort  to 
the  remedy  proposed  by  socialism  and  destroy  all 
the  vast  gains  to  the  race  of  private  property  in 
order  to  remove  only  lesser  disadvantages. 

Private  property,  of  course,  is  not  ideally  per- 
fect ;  it  contains  a  composite  of  various  possibilities. 
Under  it,  great  and  unexpected  wealth  may  come 
to  a  man  without  any  foresight  or  skill.  A  pioneer 
squatter  in  his  log-house,  living  on  scanty  crops 
from  a  poor  soil,  may  awake  some  morning  to  find 
he  is  living  over  a  rich  deposit  of  oil,  or  copper,  or 

45 


LATTER-DAY  PROBLEMS 

zinc.  Possibly  such  discoveries  may  be  regarded  as 
partly  belonging  to  the  State,  if  the  State  is  poor; 
but,  as  a  rule,  under  private  property,  they  belong 
to  the  owner  of  the  land.  It  may  thus  throw  oppor- 
tunity and  wealth  into  the  lap  of  the  lucky  without 
the  exercise  of  any  toil  or  thrift.  Many  large  for- 
tunes have  originated  in  this  way.  Nevertheless, 
such  fortunes  arise  from  an  addition  to  the  wealth 
of  the  world,  and  are  not  due  to  a  subtraction  from 
that  produced  by  any  one  else.  No  one  else  is  hurt. 
Unless  such  gains  as  these  are  permitted,  however, 
it  would  be  difficult  to  retain  other  and  similar 
gains  always  expected  by  persons  of  small  means. 
That  is,  millions  of  our  people  have  bought  farm 
lands  with  the  expectation  that  the  increase  of 
population  in  their  neighborhood  would  raise  the 
value  of  their  holdings.  An  unearned  increment 
goes  to  the  farmer;  and  no  one  seems  to  think  evil 
of  it,  when  it  is  small  in  amount.  But  the  principle 
of  equal  treatment  is  involved  whether  the  amount 
be  large  or  small.  Thus,  there  is  here,  in  these 
cases,  no  reason  at  all  for  destroying  all  the  enor- 
mous gains  from  private  property  because  of  some 
possible  inconsistencies  which  are  incidental  to  the 
general  institution.  To  destroy  the  important 
gains  in  order  to  avoid  some  lesser  evils,  as  would 

46 


SOCIALISM  A  PHILOSOPHY  OF  FAILURE 

follow  from  the  socialistic  dogma,  would  be  another 
evidence  of  detachment  from  the  world  of  fact  in 
which  we  live.  It  is  like  the  traveller  who  throws 
away  his  shoes  because  they  pinch  his  toes,  and 
who  finds  himself  as  a  consequence  obliged  to 
tread  a  flinty  road  in  his  bare  feet.  He  is  very  cer- 
tain to  return  to  shoes  sooner  or  later. 


Since  the  socialist  believes — provided  he  is  not 
himself  the  owner  of  property — that  the  major  part 
of  the  crimes  against  society  arise  from  contests  for 
property,  he  may  hope  to  regenerate  social  life  by 
the  annihilation  of  this  source  of  crime.  But  un- 
less human  nature  is  transformed  men  will  still  be 
selfish  and  unprincipled  whether  private  property 
exists  or  not.  If  a  river  is  fed  by  a  mountain 
stream,  the  river  does  not  cease  to  exist  merely  be- 
cause its  course  is  diverted  by  blocking  up  its  old 
river-bed.  This  discussion  of  the  abolition  of 
private  property  is  as  old  as  the  Romans.  It  is 
now  largely  academic. 

Nor  is  it  of  much  avail  to  analyze  the  economics 
of  socialism  which  have  been  filtered  down  from 
Marx  through  many  absorbing  and  modifying 
minds.  There  is  no  uniform  economic  programme 

47 


LATTER-DAY  PROBLEMS 

among  the  wide-spread  sections  of  the  socialist 
propagandists.  As  has  been  said,  socialism  is  not 
a  logical  system  of  thought.  A  feeling  of  injustice 
having  arisen,  doctrines  have  been  created  from 
time  to  time,  to  suit  the  need.  Socialism  is  not  to 
be  overcome  by  argument  and  economic  analysis; 
it  can  be  removed  only  by  removing  the  causes  of 
the  feeling — however  that  may  have  arisen.  So- 
cialists hot  from  the  ovens  of  European  absolutism 
still  sizzle  after  being  placed  in  the  cool  air  of  free 
America.  Unable  to  reason  calmly,  their  emotions 
throw  them  passionately  against  any  form  of  con- 
trol, even  that  which  free  representative  govern- 
ment has  established  in  the  general  interest.  Yet 
they  place  before  them  the  shield  of  some  sort  of 
Marxian  theory,  behind  which  they  fight. 

Since  inequality  of  wealth  is  believed  to  be  due 
to  a  wrong  social  system,  it  was  natural  for  the 
proletariat  to  devise  a  theory  by  which  the  value  of 
the  product  was  claimed  to  have  been  created  solely 
by  labor — meaning  usually  manual  labor.  By 
eliminating  capital  as  a  necessary  agent  of  produc- 
tion, of  course  interest  was  regarded  as  a  "steal." 
Thus  the  rhetoric  of  socialism  has  produced  a 
flamboyant  literature  in  which  the  industrial 
struggle  is  always  believed  to  be  between  labor  and 

48 


SOCIALISM  A  PHILOSOPHY  OF  FAILURE 

capital.  And,  consequently,  capitalism  is  re- 
garded as  a  system,  and  almost  blackened  with 
sulphurous  invective.  Whatever  is  meant  by 
"capitalism" — and  it  is  charged  with  countless 
sins — capital  itself  is  as  necessary  to  production  as 
is  labor,  both  manual  and  mental.  This  is  a  fact, 
to  be  observed  by  any  one  who  has  eyes.  If  labor 
is  in  itself  all-sufficient,  then  why  do  not  the  laborers 
themselves  go  on  erecting  shoe-factories  and 
cotton-mills  and  put  the  product  on  the  market? 
There  is  absolutely  nothing  to  prevent  but  the  lack 
of  skilled  management,  which,  after  all,  is  only  a 
high  grade  of  mental  labor.  It  is  silly  to  talk  about 
capital  not  being  needed  in  production.  Capital 
and  labor  are  both  as  necessary  to  each  other,  if 
production  is  intended,  as  the  two  blades  of  the 
scissors  are  necessary  for  cutting.  It  is  a  place  for 
the  old  Roman  story  of  the  stomach  and  the  other 
members  of  the  body. 

When  socialists  saw  that  the  product  provided 
more  than  wages  for  manual  labor,  they  accounted 
for  it  by  calling  it  "surplus  value."  This  was  only 
their  vague  way,  in  default  of  economic  analysis, 
of  explaining  the  existence  of  a  sum  which,  in  any 
modern  industry,  must  go  to  certain  other  factors 
in  industry  which  cannot  by  any  possibility  be 

49 


LATTER-DAY  PROBLEMS 

overlooked  if  production  is  to  continue.  The 
socialist  urges  that  wealth  is  unjustly  distributed 
because  the  whole — or  the  major  part — does  not 
go  to  manual  labor.  If  capital  demands  a  share 
as  essential  to  production,  it  sometimes  excites 
cerebral  irritation  in  the  socialist.  Now,  if  the 
laborer  only  knew  it,  he  would  find  that  the  battle 
is  going  his  way.  The  distribution  is  not  going 
in  favor  of  capital,  but  in  favor  of  labor.  Human 
effort  is  winning  the  day.  Capital  itself  is  neces- 
sary to  production,  whenever  any  division  of 
labor  exists;  but  the  percentage  received  by  cap- 
ital, qua  capital,  is  not  an  increasing  share,  or 
percentage.  Ask  any  widow,  who  has  been  left 
capital  by  her  husband,  if  she  can  invest  her  funds 
at  an  increasing  rate.  Then,  what  is  all  this  ex- 
citement about  ?  Why  is  capital  so  much  abused  ? 
Simply  because  there  are  other  factors  in  produc- 
tion which  must  receive  shares,  and  the  emotional 
theorists  have  not  had  enough  horse-sense  to  see 
it;  and  they  think  that  capital  gets  it  all.  The 
truth  is,  that  the  largest  shares  in  industry  do 
not  go  to  capital,  but  to  labor — not  unskilled 
manual  labor,  but  to  skilled  labor,  and  to  highly 
efficient  mental  labor  in  the  management  and 
organization  of  industry.  If  the  socialist  but 

5° 


SOCIALISM  A  PHILOSOPHY  OF  FAILURE 

knew  it,  he  would  find  this  outcome  to  be  the  one 
cheerful  and  inspiring  thing  in  the  world  of  to-day. 
That  is,  the  contest  for  the  distribution  of  the 
wealth  produced  is  one  of  laborers  against  labor- 
ers; and  the  cheerful  thing  about  it,  and  that 
which  opens  up  a  vista  of  promise  to  any  man  of 
ambition  and  ability,  is  that  industrial  capacity 
will  carry  a  man  to  the  front  and  win  the  enor- 
mous wages  which  go  to  organizing  power,  just 
as  surely  as  wind  and  muscle  will  win  a  Mara- 
thon race.  The  competitive  struggle,  which  so 
agitates  the  socialist,  is  really  a  contest  of  inferior 
against  superior  labor  power,  of  inferior  against 
superior  human  effort  whether  physical  or  mental. 
Not  understanding  this,  he  wishes  to  escape  the 
penalty  of  inferiority — not  by  improving  the  in- 
ferior until  it  equals  the  superior — but  by  resort 
to  the  philosophy  of  failure,  and  the  abolition  of 
the  struggle!  The  folly  of  it  is  almost  pathetic. 
It  is  more  agreeable  to  be  told  that  the  cause  of 
low  wages  is  in  something  outside  of  him,  instead 
of  being  instructed  that  the  cause  is  within  him- 
self, in  his  native  power  or  in  his  education  and 
training.  This  is  the  homely  truth  which  should 
be  enforced,  without  regard  to  the  popularity  of 
him  who  says  it. 


LATTER-DAY  PROBLEMS 

If  pushed  too  hard,  the  agitator  will  still  recur 
to  the  old  point  that  large  accumulations  are 
obtained  only  at  the  expense  of  the  share  of  others. 
As  has  been  said  before,  there  is  both  right  and 
wrong  in  the  world;  so  there  are  fortunes  both 
rightly  and  wrongly  won.  Some  fortunes,  more- 
over, have  been  gained  in  providing  for  men  the 
means  of  intemperance  and  speculation.  Grant 
this.  Yet,  as  things  now  are,  society  can,  if  it 
wishes,  provide  the  necessary  means  of  preventing 
these  wrongs.  Because  reformers  shrink  at  this 
task — the  only  practical  remedy  available — there 
is  no  reason  for  overthrowing  all  the  institutions 
which  have  been  evolved  by  the  race  in  centuries 
of  growth.  The  sound  and  healthy  elements  in 
society,  the  elemental  sources  of  character  and 
legitimate  industry,  should  not  be  destroyed  in 
the  effort  to  strike  out  minor  evils.  That  would 
be  a  mistaken  maladjustment  of  emphasis.  To 
assume  that  all  wealth  is  won  at  the  expense  of 
others  is  to  assume  that  all  men  are  wholly  evil. 
No  mercy  should  be  shown  to  wrong-doing  in 
industry  any  more  than  in  politics  and  govern- 
ment. Just  as  there  are  statesmen  who  are  not 
corrupt  politicians,  so  there  are  honorable  men  of 
affairs  in  industry.  Indeed,  the  industrial  world 

52 


SOCIALISM  A  PHILOSOPHY  OF  FAILURE 

is  full  of  examples  of  wealth  honorably  won. 
Because  some  men  are  evil,  there  is  no  reason  for 
assuming  that  a  materialistic  philosophy  bent  on 
redistributing  wealth  will  make  all  business  men 
into  perfect  human  beings. 

VI 

The  philosophy  of  socialism  has  spread  in 
many  directions  under  a  kindly  desire  to  make 
things  right.  It  centres  about  the  abolition  of 
competition.  Thus,  in  a  way,  it  seems — per- 
haps wrongly — to  decry  the  necessity  of  encour- 
aging the  free  expression  of  individual  activity 
in  industry.  It  assumes  that  the  evil-doing  of 
society  can  be  removed  by  the  action  of  the  state. 
If  men  are  unrestrained,  a  vast  amount  of  "so- 
cial power,"  it  is  said,  is  allowed  to  go  to  waste. 
Thus  a  paternalistic  form  of  government  is 
looked  upon  sympathetically  even  by  those  who 
would  not  wish  to  be  regarded  as  socialists.  The 
restraint  upon  the  free  action  of  human  initia- 
tive is  supposedly  in  the  best  interest  of  a  country's 
growth  in  power  and  happiness. 

One  point  in  this  connection  is  clear:  it  is  de- 
sirable to  get  all  the  gains  of  individual  initiative 
and  creative  power,  and  yet  to  prevent  the  evils 

S3 


LATTER-DAY  PROBLEMS 

of  unrestrained  individualism.  Hence,  we  get  a 
very  simple  maxim  of  political  interference: 
Just  as  soon  as  the  acts  of  any  person  infringe 
upon  the  rights  of  others  the  State  should  interfere 
in  the  interest  of  equality  and  justice.  Beyond 
this  limit  individual  activity  should  be  left  un- 
trammelled and  encouraged  to  believe  that  it  will 
receive  all  the  rewards  due  to  its  own  initiative. 
It  is  unquestionable  that  the  continued  imposi- 
tion upon  others  of  power  and  direction  from  out- 
side inevitably  tends  to  reduce  the  creative  strength 
of  the  individual  and  to  bring  about  a  deteriora- 
tion in  the  stock.  The  only  way  by  which  the 
best  can  be  got  out  of  the  race  is  by  stimulating 
rather  than  by  repressing  every  possible  kind  of 
new  energy — and  by  offering  all  possible  rewards 
for  its  exercise.  It  is  hardly  conceivable  that  any 
one  set  of  government  officials  should  be  so  om- 
niscient as  to  know  just  how  to  stimulate  every 
other  human  being  by  processes  of  legislation. 

Finally,  it  would  be  only  fair  to  compare  so- 
cialism, which  is  an  ideal,  untested  by  experience, 
with  the  competitive  system,  not  as  it  is  now,  but 
as  it  would  work  out  with  a  perfected  human 
nature.  To  improve  the  world,  living  as  at  pres- 
ent under  a  competitive  system,  offers  an  induce- 

54 


SOCIALISM  A  PHILOSOPHY  OF  FAILURE 

ment,  as  great  as  does  socialism,  to  the  eager 
idealist  who  wishes  to  work  for  righteousness.  If 
perfection  and  noble  ideals  are  established  as  per- 
manent elements  of  the  competitive  system  we 
shall  have  as  great  results  as  in  the  dream  of  so- 
cialism. But  perfection  is  no  more  to  be  looked 
for  in  the  one  case  than  in  the  other. 

Thus  we  are  led  to  believe  that,  while  idealism 
is  an  essential  incentive  to  progress — and  Ameri- 
cans are  preeminently  idealists — its  path  to  defi- 
nite results  must  lie  in  some  direction  other  than 
socialism.  Nor  should  we  wish  to  be  understood 
to  mean  that  socialism  has  been  wholly  useless. 
It  has  forced  its  case  to  serious  discussion ;  and  the 
liberal  conceptions  behind  it  cannot,  and  ought 
not  to  be,  lightly  disposed  of.  But,  as  a  practical 
people,  who  must  deal  with  the  world  as  it  exists, 
we  must  inevitably  conclude  that  socialism  is  not 
a  means  appropriate  to  the  desired  end. 


55 


CHAPTER  III 
THE  ABOLITION  OF  POVERTY 


T)ERSONS  disposed  to  exaggerate  not  infre- 
A  quently  tell  us  that  we  are  living  on  a  vol- 
cano; and  that  an  upheaval  more  destructive 
than  the  French  Revolution  is  close  upon  us, 
unless  we  set  to  and  change  the  present  condi- 
tions under  which  some  have  unlimited  expendi- 
ture for  their  slightest  desire,  while  masses  of 
others  struggle  for  a  miserable  existence  only 
with  pain  and  grinding  labor.  Certainly,  in  the 
whole  problem  of  improving  the  economic  status 
of  mankind,  the  one  phase  which  appeals  most  to 
us  all  is  the  one  which  concerns  the  lower  class  of 
unskilled  workers.  With  those  who  have  already 
won  something,  and  who  have  already  risen  a 
round  or  two  on  the  industrial  ladder,  we  are  not 
so  deeply  interested  as  with  those  at  the  bottom 
who  are  unskilled,  the  sport  of  every  change  of 
industrial  demand,  and  ignorant  of  means  of 

56 


THE  ABOLITION  OF  POVERTY 

betterment.  It  is  the  beggarly  sums  received  by 
those  in  uncertain  and  overcrowded  employments 
— and  too  often  the  unemployment  itself — which 
ought  to  stir  our  sympathies  and  set  us  to  thinking. 
What  have  we  to  offer  ?  If  economics  has  nothing 
to  present  as  an  offset  to  the  vague  and  often  in- 
jurious schemes  of  the  untrained  sentimentalists, 
then  it  should  retire  to  the  limbo  of  useless  and 
abandoned  studies.  In  brief,  what  has  it  to  say  as 
to  the  elevation  of  a  race,  or  class,  in  the  scale  of 
living  ?  Has  it  any  practical  advice  to  offer  for  the 
abolition  of  extreme  poverty  ?  If  we  can  offer  even 
partial  solutions  of  the  problem,  we  may  help  those 
who  come  after  us  to  get  nearer  the  whole  truth. 
In  this  particular  field,  however,  there  is  a  deal 
of  feeling  and  passion  to  be  found,  to  say  nothing 
of  prejudice,  narrowness,  ignorance  and  intoler- 
ance. In  matters  touching  everyday  comfort  and 
satisfaction,  where  misery  and  bitterness  are  often 
present,  it  is  inevitable  that  there  should  be  much 
feeling.  Moreover,  at  the  very  time  of  fierce 
agitation — perhaps  the  cause  of  much  of  it — we 
have  the  rise  of  large  fortunes,  and  as  a  conse- 
quence the  striking  contrasts  presented  between 
the  very  poor  and  the  very  rich.  As  if  this  were 
not  enough,  we  have,  as  in  the  ancien  regime,  an 

57 


LATTER-DAY  PROBLEMS 

exhibition  of  arrogance  and  show  of  wealth  which, 
to  say  the  least,  is  thoughtless  and  provocative  of 
heart-burning  and  discontent.  Thus,  if  masses 
of  men  are  untrained  in  economic  analysis,  is  it 
anything  but  natural  that  they  should  often  be- 
lieve that  inequality  of  wealth  is  the  result  of  de- 
spoiling the  poor?  And  when  unjust  privilege 
has  been  shown — as  in  the  past,  or  under  foreign 
absolutism  of  to-day — to  be  the  means  of  enrich- 
ment at  the  expense  of  others,  it  is  right  that  the 
banner  of  revolt  should  be  raised.  There  is  no 
defence  for  special  privilege.  Nevertheless,  under 
free  institutions  like  ours,  where  public  opinion 
rules,  what  is  the  case?  We  have,  also,  the  very 
rich  and  the  very  poor.  How  can  this  be?  Un- 
fortunately for  our  progress  in  clear  thinking,  the 
sentimentalists  have  had  almost  the  whole  stage 
to  themselves  in  the  exposition  of  causes  before  the 
general  public;  and,  worst  of  all,  some  of  them 
have  seen  gain  in  telling  the  masses  the  things 
which  it  is  believed  would  be  agreeable,  rather 
than  in  explaining  the  truth  in  its  entirety  no 
matter  how  disagreeable  it  may  be.  A  half- 
baked  economics  has  been  given  as  food  quite  too 
long;  indeed,  the  public  has  for  some  time  felt  the 
pains  of  indigestion  from  such  diet. 

58 


THE  ABOLITION  OF  POVERTY 

It  is  the  existing  state  of  discontent  which  has 
given  the  socialists  their  greatest  opportunity. 
No  doubt  the  contrasts  in  possession  of  wealth 
form  the  best  soil  for  the  socialist  propaganda. 
Inequality  of  wealth  is  by  the  discontented  taken 
as  ipso  facto  the  proof  of  injustice;  and  the  appear- 
ance of  the  red  flag  in  our  streets  is  the  measure 
of  the  numbers  of  those  who  feel  deeply  but  who 
may  be  unable  to  give  any  economic  justification 
of  their  hostility  to  existing  institutions.  It  is 
fair  to  assume  that  the  great  majority  of  men  are 
honest  in  their  beliefs,  and  that  they  really  wish 
to  arrive  at  the  truth.  Therefore,  whatever  may 
be  our  preconceptions,  it  will  not  be  amiss  to  try 
to  discuss  with  candor  the  problem  of  improving 
the  condition  of  the  very  poor.  Whether  one 
carries  conviction  to  every  one  is  not  of  first  im- 
portance; but  it  is  of  first  importance  that  there 
should  be  a  fair  field  and  a  free  discussion  from 
all  points  of  view,  before  we  fly  into  a  passion. 
Of  socialism  per  se  we  have  discoursed  in  the  last 
chapter,  but  here  and  now  we  propose  to  ask 
directly:  How  can  the  wages  of  the  poorest  class 
be  increased,  and  their  level  of  material  comfort 
be  raised?  The  answer  to  this  question  touches 
all  those  engaged  in  the  administration  of  our 

59 


LATTER-DAY  PROBLEMS 

charities,  as  well  as  those  who  are  face  to  face 
with  the  employment  of  unskilled  labor.  It 
touches  all  of  us  everywhere  who  wish  to  make 
bad  things  better. 

n 

It  is  to  the  credit  of  the  heart  of  man  that  his 
mind  has  long  been  dwelling  on  a  diversity  of 
schemes  for  banishing  poverty.  It  would  please 
us  all  to  have  some  Utopia  come  true;  but  each 
one  in  turn  has  been  rolled  under  the  heavy  car  of 
unsentimental  fact,  and  has  expired.  Yet  we 
keep  at  the  task  of  searching  for  a  solution  which 
may  have  its  justification  in  the  elemental  forces 
of  human  nature  working  in  conjunction  with  the 
actual  world  about  us.  Certainly  no  plan  will  be 
worth  the  candle  which  is  not  based  on  some  ac- 
cepted economic  analysis.  It  is  a  matter  for  a 
life-study;  and  the  emotional,  kindly  enthusiast 
must  give  way  to  the  cold  scientific  student — at 
least  to  the  point  of  a  successful  diagnosis,  and 
before  social  nursing  is  called  upon. 

Besides  socialism,  many  wonderful  remedies 
have  come  and  gone.  Anarchism,  in  its  fury  at 
the  wrongs  of  the  world,  would  like  to  destroy 
everything;  and  yet  the  poor  human  race  would 

60 


THE  ABOLITION  OF  POVERTY 

have  to  take  up  its  burden  of  organizing  society 
again,  and  tramp  the  same  old  road  of  mingled 
discouragement  and  progress  to  the  point  where 
we  are  to-day.  Society  and  government  will 
never  be  perfect  until  human  beings  are  perfect. 
Anarchism  proposes  nothing  constructive.  It  is 
a  passion,  not  a  remedy. 

In  the  train  of  socialism  are  found  many  minor 
remedies  of  which  governmental  interference  is 
the  main  constituent.  It  is  assumed  somehow  or 
other  that  bureaucracy  can  order  the  conduct  of 
others  in  such  a  way  as  to  permanently  improve 
the  material  condition  of  the  poor.  How  can  it 
raise  wages?  Under  political  pressure  the  State 
may  fix  a  rate  of  wages  for  those  in  its  employ- 
ment; but  can  it  regulate  the  market  price  of 
labor  ?  If  so,  it  must  control  not  only  the  demand, 
but  the  supply — including  the  birth-rate — in  all 
areas  where  immigration  is  possible.  This  would 
be  a  heavier  task  than  to  regulate  the  price  of 
wheat;  yet  the  State  would  hardly  attempt  that. 
But  municipal  ownership  of  various  public  ser- 
vices sometimes  appeals  to  the  wage-earners  on 
the  ground  that  wages  higher  than  the  market- 
rate  can  be  enforced.  For  the  purpose  of  getting 
the  labor  vote  this  hope  may  be  held  out;  but  it 

61 


LATTER-DAY  PROBLEMS 

can  affect  but  a  very  small  number  of  competitors 
for  employment.  And,  if  men  who  could  not  ob- 
tain high  wages  in  the  competitive  field  are  fav- 
ored by  the  State,  then  we  have  a  case  of  special 
privilege  for  a  few — rewards  paid  independently 
of  efficiency — against  which  system  no  vitupera- 
tion has  hitherto  seemed  excessive.  Just  as  soon 
as  special  favors  are  allowed,  then  the  strong,  the 
wily,  and  the  men  with  the  longest  purse  are  cer- 
tain to  win.  Such  methods  of  raising  wages  are 
impossible;  "in  this  way  madness  lies." 

To  many  minds  it  has  seemed  possible  to  re- 
construct society  and  increase  wages  by  the 
nationalization  of  land.  Henry  George's  theory 
assumes  that  the  industrial  product  is  divided,  in 
crucial  instances,  between  labor  and  land — thus 
excluding  capital.  To  the  extent  that  rent  is  paid 
for  land,  to  that  extent,  they  say,  it  is  subtracted 
from  what  should  go  to  labor.  George's  conclu- 
sion is,  in  reality,  based  upon  a  system  of  distribu- 
tion which  has  never  been  given  much  attention  by 
critics.  The  absence  of  logic  in  his  jointing  of  the 
theory  of  population,  capital  and  labor  is  one 
which  would  be  a  treasure-trove  for  a  student  of 
logical  fallacies  in  economics.  Taken  apart  from 
his  system  of  distribution,  however,  the  question 

62 


THE  ABOLITION  OF  POVERTY 

of  the  unearned  increment  was  not  original  with 
George.  The  proposal  to  wipe  out  payments  for 
unearned  increments  is  at  least  as  old  as  John 
Stuart  Mill.  Unless  the  remedy  carry  with  it  the 
abolition  of  private  property — pure  socialism, 
which  George  resented — it  was  clear  that  the 
State  must  become  responsible  for  losses  as  well 
as  gains  in  the  value  of  land;  and,  with  the  pur- 
pose to  eliminate  value  based  on  future  gains,  no 
practicable  plan  has  ever  been  presented  by  which 
innocent  investors  in  land  can  be  equitably  treated. 
Nor  is  attention  given  to  what  society  would  in- 
evitably lose  by  thus  giving  up  some  part  of  the 
existing  forms  of  property.  But  grant  all  the 
theory  demands:  How  can  nationalization  of  land 
raise  the  wages  of  the  very  poor? 

If  land  is  nationalized,  the  unearned  increment 
would  go  to  the  State.  Then  how,  as  a  conse- 
quence, are  the  very  poor  to  have  their  wages 
raised  ?  If  made  the  basis  for  remission  of  taxes, 
the  very  poor  who  pay  no  taxes  to  speak  of  are 
not  much  benefited.  Will  the  nationalization  of 
land  lead  to  the  employment  of  more  persons? 
Will  the  officials  open  a  bureau  where  applicants 
may  get  a  supplement  to  market  wages?  Who 
will  decide  what  should  be  given  a  street-sweeper, 

63 


LATTER-DAY  PROBLEMS 

what  to  a  locomotive-driver?  Or,  if  the  State 
gets  control  of  this  magnificent  fund,  will  politics 
be  purer  than  they  are  now,  and  will  the  grafters 
or  the  laborers  get  the  most?  In  such  a  game, 
will  not  the  clever  and  unscrupulous  get  the  lion's 
share;  and  where  will  the  inexperienced  working 
man  come  in?  George's  scheme  is  one  which 
misses  the  central  point  of  attack;  it  deals  with 
external  rather  than  with  vital  things  affecting 
wages.  To  emphasize  the  question  of  land  is  to 
draw  attention  away  from  an  essential  reason  for 
higher  wages — the  improvement  in  the  productive 
capacity  of  the  man.  It  is  theory,  pure  theory; 
and  a  nationalization  of  land,  no  matter  how 
strongly  it  appeals  to  many  high-minded  enthu- 
siasts, offers  us  no  definite  means  for  getting 
higher  wages  for  the  very  poor. 

Next,  quite  distinct  from  the  idealistic  plans  of 
the  socialists,  we  have  the  immediate  business  de- 
mands of  the  labor  unions  for  higher  wages,  less 
hours  of  labor,  and  some  control  over  the  industry 
in  which  they  work.  Here  is  a  direct  object,  to 
be  gained,  as  explained  elsewhere,1  by  the  method 
of  monopolizing  the  supply  of  labor  permitted  to 
compete.  The  non-union  man  is  left  outside  the 

1  Chapter  I. 

64 


THE  ABOLITION  OF  POVERTY 

breastworks.  In  all  strikes,  it  seems  to  have  been 
generally  admitted  that  unions  composed  of  un- 
skilled labor,  such  as  the  teamsters,  are  easily 
beaten  by  the  unlimited  supply  of  unskilled  labor 
which  can  be  brought  into  competition  at  any  point; 
and  that  the  only  means  of  success  in  that  grade  of 
labor  is  by  the  use  of  force  against  non-union  men. 

But  it  is  this  very  class  of  the  unskilled  that  we 
are  most  concerned  with.  Can  the  unions  pro- 
vide a  plan  for  giving  them  regular  employment, 
and  raising  their  wages?  Can  they  abolish  pov- 
erty? Obviously,  the  principle  of  monopoly, 
under  which  unionism  works,  cannot  regulate  the 
demand  of  employers  for  all  of  the  unskilled  labor 
in  existence;  nor  can  it  control  the  supply  of  com- 
petitors— for  it  is  in  this  class  that  the  birth-rate  is 
the  highest  and  immigration  the  most  considerable. 
Whatever  may  be  done  by  the  unions — which  in- 
clude perhaps  seven  to  ten  per  cent,  of  the  so-called 
laboring  classes  in  our  country — they  are  least 
effective  in  the  problem  of  helping  the  very  poor. 

Then,  we  are  offered  the  aid  of  co-operation, 
profit-sharing,  and  minor  proposals  like  con- 
sumers* leagues.  Their  help  is  not  to  be  despised ; 
they  add  to  the  sum  total  of  gains  for  many  classes ; 
but  co-operation  and  profit-sharing  are  for  those 

65 


LATTER-DAY  PROBLEMS 

who  already  have  made  progress  up  the  industrial 
ladder,  and  who  are  in  a  position  to  go  higher. 
And  consumers'  leagues  deal  more  with  sanitary 
than  economic  affairs;  they  may  assure  us  that 
goods  will  not  be  produced  in  pest-breeding  sweat- 
shops, but  they  cannot  pretend  to  control  the  sup- 
ply of  labor,  or  the  demand  for  it,  and  thus  raise 
the  wages  of  the  worst  paid  labor. 

m 

In  default  of  success  in  solving  the  riddle  by  the 
various  schemes  thus  proposed,  we  are  obliged  to 
resort  to  the  constructive  proposals  which  follow 
from  the  results  attained  by  economic  science. 
An  economic  analysis  of  the  forces  influencing 
changes  in  the  conditions  of  the  worst  paid  labor- 
ing classes,  while  presented  with  due  regard  to 
one's  personal  shortcomings,  ought,  however,  to 
be  received  as  an  honest  attempt  to  treat  the  in- 
quiry from  a  serious  point  of  view.  The  out- 
come may  not  satisfy  those  whose  convictions  are 
already  immutable,  but  it  may  force  the  thinking 
along  lines  different  from  those  in  the  plans  above 
examined. 

Nor  is  our  objective — which  is  ascertaining  the 
means  of  raising  the  level  of  comfort  of  the  very 

66 


THE  ABOLITION  OF  POVERTY 

poor — much  different  in  kind  from  that  which  the 
statesman  must  face  in  studying  how  to  elevate 
an  inferior  race.  It  involves  an  investigation  into 
the  psychological  and  educative  processes  by 
which  human  nature  may  be  led  to  create  an  in- 
creased amount  of  economic  satisfactions.  The 
problem  first  faced  by  General  Armstrong  at 
Hampton,  and  which  confronts  Booker  T.  Wash- 
ington at  Tuskegee,  is  practically  the  same  which 
confronts  us,  when  we  wish  to  raise  the  level  of  eco- 
nomic satisfactions  obtained  by  the  worst  paid 
classes  in  existing  society.  With  this  problem 
economics  has  long  been  familiar.  It  is  a  truism 
to  recite  that  an  increase  in  the  production  of 
material  wealth  has  its  stimulus  in  the  creation, 
or  greater  intensity,  of  human  wants.  A  people 
without  ambition,  without  a  desire  for  improve- 
ment, without  a  wish  for  a  product  strong  enough 
to  overcome  the  obstacles  nature  presents  to  its 
growth  or  manufacture,  cannot  increase  its  eco- 
nomic well-being.  Sloth,  idleness,  indifference, 
and  lack  of  self-control  enough  to  endure  a  pres- 
ent sacrifice  for  the  sake  of  a  future  gain,  will 
block  economic  progress  for  the  class  we  have  in 
mind.  At  Tuskegee,  Mr.  Washington  reports 
that  his  pupils  already  have  the  intensity  of  wants 

67 


LATTER-DAY  PROBLEMS 

which  makes  them  ready  for  the  learning  of  prac- 
tical methods  for  producing  that  which  will  sup- 
ply their  wants.  If  wants,  however,  do  not  exist 
in  a  class  long  submerged  in  misery,  poverty,  and 
hopelessness,  the  very  first  step  is  to  excite  their 
wants — even  if  only  for  better  clothing,  food  and 
primary  necessities.  Perhaps  this  point  may 
seem  to  the  well-fed,  self-sufficient  members  of 
our  community  as  rather  academic.  But  the 
facts  cannot  be  blinked.  Only  too  many  of  those 
we  are  now  concerned  with  have  come  to  believe 
that  the  world  is  against  them,  that  their  lot  is 
unchangeable  by  individual  effort,  and  that  help 
can  come  only  from  outside  themselves.  This  is 
the  reason  why  socialism,  or  paternalism,  appeals 
to  them  so  strongly;  the  cause  why  their  material 
satisfactions  are  so  small  is  agreeably  placed  upon 
the  forms,  or  upon  the  action,  of  the  State,  rather 
than  upon  their  own  productive  inefficiency. 
Therefore,  without  spinning  fine  webs  of  theory, 
we  find  ourselves  thus  early  in  our  quest  in 
possession  of  one  of  the  general  requirements 
for  the  relief  of  the  very  poor.  That  is,  their 
wants  must  be  enlarged  and  made  more  intense. 
These  conditions  are  absolutely  essential  to 
progress. 

68 


THE  ABOLITION  OF  POVERTY 

Of  course,  we  must  be  prepared  for  a  disdain- 
ful curl  of  the  lip  from  the  cock-sure  social  doctor, 
who  informs  us  that  the  slums  are  full  of  those 
who  have  more  wants  than  means  of  supplying 
them.  Possibly  so;  but  how  many  wish  un- 
limited satisfactions  and  yet  are  unwilling  to  give 
up  indulgences  in  order  to  get  them?  Such  an 
attitude  is  not  to  the  point.  Wants  must  be 
strong  enough  to  give  rise  to  productive  effort, 
and  the  exercise  of  all  the  homely  qualities  essen- 
tial to  patient  industry.  There  must  be  kept  in 
mind,  too,  that  wants  are  both  good  and  evil; 
and  that  the  increase  of  wants  which  have  only 
evil  influences  has  no  gain  for  the  very  poor.  In 
fact,  they  are  often  poor  because  their  wants  are 
of  the  wrong  kind.  The  great  trouble  too  often 
is  that  wealth  is  wanted  fiercely  enough,  but  that 
the  mind  is  constantly  occupied  in  devising 
schemes  by  which  it  can  be  got  without  the  usual 
sacrifices  of  effort  and  abstinence.  Here  is  the 
paradise  of  the  get-rich-quick  promoters;  and 
here  is  the  chance  to  tell  the  gullible  that  others 
are  getting  rich  at  their  expense. 

Yet  on  the  other  hand,  there  is  an  increase  of 
strong  incentives  to  new  and  more  intense  wants, 
which  are  in  fact  supplying  a  firm  basis  for  prog- 


LATTER-DAY  PROBLEMS 

ress  in  economic  comfort.  Indeed,  one  of  the  hope- 
ful things  in  the  present  situation — although  one 
which  to  many  seems  a  very  presage  of  revolution — 
is  the  wide-spread  discontent  with  existing  economic 
rewards.  The  industrial  unrest,  which  causes 
anxiety  in  some  quarters,  is,  to  my  mind,  a  healthy 
and  hopeful  sign  of  coming  progress  for  the  classes 
we  have  in  mind;  because  it  is  the  indication  of 
ambition  and  a  growing  intensity  of  economic 
wants,  without  which  practical  proposals  for  in- 
creased productive  efficiency  would  be  futile.  It 
has  long  been  a  commonplace  that  international 
trade  has  been  an  incentive  to  civilization  and 
commerce  with  inferior  races  because  the  presen- 
tation to  the  mind  of  new  articles  and  new  methods 
starts  fresh  desires  and  is  followed  by  the  wish  to 
satisfy  these  desires.  But  to-day  with  us  the  pos- 
sibility of  stolid  aquiescence  in  poverty  is  less 
likely  than  ever  before.  In  fact,  the  arrogant  dis- 
play of  wealth,  which  is  so  often  vulgar,  is  itself, 
by  dint  of  great  contrasts,  a  means  of  exciting  the 
very  poor  to  discontent,  and  to  a  wish  to  enjoy  the 
comforts  possessed  by  others.  Of  course,  this 
incentive  contains  in  itself  potential  danger, 
should  men  be  taught  that  these  stimulated  de- 
sires for  wealth  can  be  satisfied  in  any  other  than 

70 


THE  ABOLITION  OF  POVERTY 

legitimate  means.  Still  emulation  and  imitation 
remain  strong  causes  to  aid  in  improving  the  con- 
dition of  the  very  poor. 

Furthermore,  it  may  be  possible  to  bring  into 
existence  new  desires,  such  as  the  pleasure  arising 
from  knowing  that  a  sum  has  been  saved  and  put 
away  to  meet  an  unexpected  need  in  the  future. 
Much  economic  progress  depends  upon  the  kind 
of  desires  which  are  given  strong  emphasis.  In 
this  connection,  we  are  led  to  indicate  the  point  of 
contact  between  psychology  and  economics.  Hav- 
ing made  the  economic  analysis,  we  have  a  right 
here  to  call  upon  the  psychologist  to  inform  us  how 
the  human  mind  can  best  be  touched  to  bring 
about  the  desired  action  by  the  individual.  Not 
only  is  it  a  question  as  to  how  desires  may  be 
created  or  stimulated,  but  how  to  repress  unfortu- 
nate desires,  and  to  incite  wholesome  desires.  Here 
is  a  wide,  but  uncultivated,  field  upon  which  we 
cannot  enter,  even  if  competent;  for,  as  yet,  no 
study  of  this  psycho-economic  and  much-needed 
problem  has  been  made.  Here  is  where  psy- 
chology has  a  large  practical  work  to  do  for  the 
help  of  organized  charity  and  for  the  economist 
who  is  engaged  in  improving  the  condition  of  the 
poor.  Indeed,  the  literature  of  the  consumers' 


LATTER-DAY  PROBLEMS 

league  rather  loosely  argues  that  society  is  to  be 
saved  only  through  changing  the  ways  of  consump- 
tion. That  is,  perhaps,  only  another  way  of  say- 
ing that  society  can  be  saved  only  by  making  men 
better.  For,  if  we  assume  that  we  can  make  men 
have  only  wholesome  desires,  we  have  made 
human  nature  perfect.  It  is  a  large  contract, 
even  for  the  Church,  to  make  the  whole  world 
perfect;  but  we  approve  of  the  intention.  For 
our  present  objective,  we  need  to  ask  psychology 
for  practical  schemes  to  stimulate  and  to  create 
desires  for  more  economic  comfort — as  well  as  for 
desires  of  a  legitimate  kind  and  for  sufficient  char- 
acter in  the  worker  to  persist  throughout  the  eco- 
nomic processes  needed  for  the  continued  pro- 
duction of  what  will  satisfy  these  desires. 

IV 

Given  the  desire  for  satisfactions  and  the  willing- 
ness to  produce,  then,  we  are  face  to  face  with  the 
need  of  practical  methods  of  teaching  the  very 
poor  how  to  produce.  What  a  man  can  consume 
is,  generally  speaking,  what  he  can  produce;  in- 
crease his  productivity,  and  you  will  increase  his 
control  over  the  consumption  of  the  articles 
which  satisfy  his  wants.  But  before  making 

72 


THE  ABOLITION  OF  POVERTY 

specific  suggestions  for  augmenting  productive 
power,  it  is  necessary  to  refer  to  a  way  by  which 
the  very  poor  must  first  be  tested.  They  are 
usually  herded  in  crowded  city  districts.  First 
of  all,  those  who  are  willing  must  be  separated 
from  those  who  are  unwilling  to  work.  The 
criminal,  the  lazy,  the  intemperate,  the  degenerate 
stand  in  an  entirely  different  class  from  the  un- 
fortunate, the  ignorant,  the  unskilled,  and  the 
temporarily  disabled.  The  problem  of  treatment 
of  the  former  is  not  an  economic,  but  a  political 
and  social  one;  while  the  case  of  the  latter  is 
primarily  an  economic  one.  Keeping  this  separa- 
tion in  mind,  what  practical  test  can  be  offered  to 
distinguish  between  the  two  kinds?  The  answer 
is,  the  offer  of  work.  But,  says  an  objector,  shall 
the  municipality  assume  the  whole  labor  bill  of 
the  unemployed?  Not  necessarily.  In  the  first 
place,  municipal  employment  agencies  are  means 
yet  untried  to  any  extent;  the  means  of  connect- 
ing the  special  demand  with  the  special  labor  is 
capable  of  very  great  development.  More  than  that, 
some  of  the  ideas  connected  with  the  antiquated 
poor-house  system  are  capable  of  great  variation. 
Indeed,  the  Salvation  Army  has  already  shown 
the  way.  For  instance,  farm  labor  is  exceedingly 

73 


LATTER-DAY  PROBLEMS 

scarce;  and  immense  tracts  of  land  are  almost 
untouched.  Let  the  municipality  join  with  or- 
ganized charity  associations,  and  enable  all  those 
who  are  willing  to  be  set  to  work  upon  the  land. 
In  case  of  ignorance,  an  intermediate  period  may 
be  spent  under  skilled  agricultural  instructors, 
until  the  laborer  can  be  sent  to  his  own  plot,  where 
in  due  time  he  should  be  able  to  pay  for  his  home 
while  living  a  life  of  independence  and  honest  toil. 
The  cost  of  this  method  would  be  the  advances 
for  instruction  and  for  the  land,  the  outlay  for 
which  is  to  be  repaid — a  small  outlay  compared 
with  sums  otherwise  spent  for  relief,  and  small  as 
considered  from  the  point  of  view  of  possible 
paupers  changed  to  self-respecting  owners  of  land. 
In  a  community  whose  ranks  are  well  shaken  into 
place  movement  is  probably  an  extreme  remedy, 
to  be  resorted  to  only  by  the  consent  of  those  con- 
cerned; but  in  a  new  country  like  ours,  voluntary 
movement  would  be  quite  effective.  Moreover, 
many  may  not  be  suited  for  the  land,  and  training 
for  other  and  mechanical  industries  must  be  kept 
open  by  industrial  education.  To  be  sure,  all  this 
is  not  as  easy  as  it  looks.  In  spite  of  the  misery  of 
poverty,  great  numbers  will  balk  at  continuous 
labor,  and  yearn  for  the  heated  dens  of  the  gay 

74 


THE  ABOLITION  OF  POVERTY 

city  where  the  social  instinct  tends  to  hold  them. 
In  that  case,  they  must  be  practically  regarded  as 
having  gone  over  to  the  other  class  of  the  helpless 
and  defectives,  and  be  treated  in  a  different  way. 
This  trial  method  of  testing  the  poor  and  un- 
employed has  the  additional  advantage  of  falling 
in  with  a  general  economic  principle  upon  which 
we  must  constantly  rely  in  this  discussion.  Wages 
are  low  where  employment  is  scarce  and  numbers 
are  great.  If  laborers  are  taken  away  from  con- 
gested city  districts  to  the  land,  they  are  placed 
where  supply  is  in  a  far  better  adjustment  to  de- 
mand. It  is  a  principle  of  wide  application  for 
our  special  purpose.  When  we  speak  of  increas- 
ing the  productive  efficiency  of  the  very  poor  in 
order  to  give  them  greater  consuming  power,  we 
refer  to  the  hope  of  finding  practical  means  of 
taking  them  out  of  the  crowded  class  where  de- 
mand for  them  is  less  relatively  to  the  supply,  and 
carrying  them  up  to  a  less  crowded  class,  where 
demand  is  greater  relatively  to  the  supply.  More 
than  that,  it  is  a  method  consistent  with  the  gen- 
eral theory  of  value  by  which  anything,  goods  or 
labor,  when  given  greater  utility,  gains  greater  ex- 
change value.  To  make  a  laborer  more  efficient 
in  production,  other  things  remaining  the  same, 

75 


LATTER-DAY  PROBLEMS 

increases  his  pay  and  his  worth  to  his  employer, 
just  as  improving  the  quality  and  power  of  a  loco- 
motive increases  its  value  to  a  railway.  Increased 
efficiency  is  to  a  laborer  what  increased  utility  is 
to  a  commodity.  But  while  supply  is  in  the  long 
run  dominant  even  over  utility,  the  effect  of  in- 
creased efficiency,  as  human  beings  go,  works  in 
practice  not  only  to  increase  his  utility  to  his  em- 
ployer, but  also  to  place  him  where  the  supply  of  his 
kind  of  labor  is  less.  Higher  wages  are,  therefore, 
in  the  natural  course  of  events,  almost  inevitable, 
when  efficiency  is  improved. 

It  has  been  necessary  to  ask  the  indulgence 
of  the  reader  in  thus  introducing — even  though 
briefly — some  dry  economic  exposition;  but  it  has 
been  done  in  order  that  we  might  make  use  of  it 
as  a  basis  for  some  practical  suggestions  for  bring- 
ing about  higher  wages.  For,  in  the  main,  it  can 
be  settled  that  unless  a  proposal  for  helping  the 
very  poor  meets  the  following  requirements,  it  can 
have  no  permanent  results  of  a  helpful  character: 

It  must  (i)  either  reduce  the  supply  of  labor  at 
a  particular  point  of  competition,  or  (2)  it  must 
operate  in  some  way  to  increase  the  demand  for 
that  special  kind  of  labor;  and  it  can  accomplish 
this  latter  end  usually  by  giving  labor  more  effi- 

76 


THE  ABOLITION  OF  POVERTY 

ciency  in  the  place  where  it  resides.  From  the  ex- 
position above  given  we  have  thus  obtained  some 
general  tests  to  be  applied  to  every  plan  for  aid- 
ing the  very  poor. 

Labor,  moreover,  is  not  of  one  kind;  it  should 
never  be  reasoned  about  en  bloc.  Nor  is  there 
such  a  thing  as  a  demand  for  labor  as  a  whole. 
Labor  appears  in  strata,  as  regards  skill  and  in- 
dustrial efficiency;  and  demand  is,  in  fact,  a  de- 
mand for  one  or  more  men  adapted  for  a  specific 
kind  of  work.  Roughly  speaking,  the  situation 
may  be  generally  expressed  by  the  accompanying 
diagram,  in  which  A  represents  the  poorest  paid 


E    \<— D 


\<-D 


\<-D 


unskilled  class,  with  which  we  are  concerned, 
lying  underneath  other  classes  rising  in  skill  and 
efficiency  from  B  to  E.  Demand,  moreover,  in 
any  one  industry  is  for  some  labor  of  all  classes; 
and  in  a  country  as  a  whole,  demand  is  a  sum  of 

77 


LATTER-DAY  PROBLEMS 

demands  in  all  industries  for  men  of  the  A  class, 
or  the  B  class,  etc.  For  our  present  purpose  we 
are  concerned  with  the  problem  of  raising  the  A 
class  to  a  higher  level.  As  things  now  stand,  the 
members  of  the  A  class  are  the  least  well  paid,  be- 
cause their  numbers  are  larger  relatively  to  the 
demand  for  them  than  those  of  the  classes  above; 
and  it  is  the  class  in  which  numbers  are  most 
thoughtlessly  brought  into  the  world.  Now  our 
objective  emerges  clearly  before  us:  How  can  we 
reduce  the  numbers  of  A,  or  increase  their  utility 
to  industry,  so  that  their  wages  may  be  larger? 

(1)  In  the  first  place,  a  permanent  effect  can  be 
produced  only  by  increasing  the  industrial  skill 
and  efficiency  of  the  members  of  class  A.    Every 
one  knows  that  skilled  gets  more  than  unskilled 
labor.    Moreover,   if  the  skilled  man   turns  in 
more  product,  the  employer  can  afford  to  give  him 
more  wages,  no  matter  what  happens  elsewhere. 
Then,  if  the  man  moves  up  out  of  A,  he  gets  into 
a  situation  where  demand  for  his  sort  is  stronger 
and  more  extended, and  yet  where  it  is  less  crowded. 
Consequently,  we  ask:  how  can  we  start  men  to 
moving  up  and  out  from  the  A  class? 

(2)  Obviously,  the  most  effective  plan  ready  to 
our  hands  is  industrial  education  and  manual 

78 


THE  ABOLITION  OF  POVERTY 

training.  General  education  in  the  public  school 
helps,  so  far  as  it  gives  control  over  essentials  and 
really  sharpens  the  mind;  but  for  definite  eco- 
nomic progress  it  is  very  far  from  sufficient.  As 
yet  it  may  be  safely  said  that  industrial  education 
is  almost  untried  in  our  country,  at  least  for  the 
classes  (such  as  the  A  class)  most  in  need  of  it. 
For  many  poor  people  among  us,  who  need  the 
direct  means  of  earning  a  subsistence,  it  is  rather 
absurd  to  give  them  the  studies  of  the  leisure  class. 
Also,  many  a  boy  dull  in  mathematics  or  science 
may  have  a  good  eye  and  a  steady  arm,  and  may 
make  a  skilful  carpenter  or  bricklayer.  Of  course, 
the  possibilities  are  as  wide  as  the  diversity  of 
men.  Germany  is  far  ahead  of  us  in  providing 
technical  schools  for  the  artisan  class.  In  short, 
we  should  make  it  as  easy  in  our  public  schools  for 
a  boy  or  girl  to  obtain  training  in  mechanics, 
plumbing,  woodworking,  cooking,  telegraphy,  etc., 
etc.,  as  in  geometry  or  chemistry.  All  this  applies 
to  women  as  well  as  to  men.  Women's  wages  are 
low  because  they  are  usually  unskilled  and  also 
in  a  crowded  class.  Our  cities  and  our  towns 
should  be  dotted  with  training  schools  suitable  for 
giving  practical  preparation  for  agriculture,  manu- 
factures, and  commerce.  At  present,  the  unem- 

79 


LATTER-DAY  PROBLEMS 

ployed  or  the  very  poor  have  no  trade  of  any  kind, 
or  are  confined  to  some  one  habitual  task,  like 
sewing  on  clothing  cut  by  machinery.  To-day, 
when  carpenters  or  plumbers  get  five  dollars  for 
a  day  of  short  hours,  and  even  "make  work,"  no 
man  handy  with  tools  need  be  poor  or  out  of 
employment  long.  It  should  not  be  necessary 
to  press  this  matter  upon  the  reader:  its  effective- 
ness for  increasing  the  wages  of  the  very  poor 
must  appear  at  a  glance.  In  addition,  its  ulti- 
mate end  is  to  inculcate  individual  independence 
and  self-respect;  it  frees  the  laborer  from  servile 
dependence  for  his  post  upon  the  mere  caprice  of 
an  employer.  The  increased  efficiency  given  to 
an  unskilled  man  increases  his  utility  to  his  em- 
ployer and  increases  the  demand  for  his  services. 
Of  course,  it  may  be  objected  that  if  all  the 
members  of  A  were  so  far  improved  as  to  be  spread 
over  B,  C,  D,  and  E,  these  other  classes  would  be 
overcrowded  and  their  wages  lowered.  First,  it 
is  to  be  replied,  the  A  class  will  always  be  with  us, 
so  long  as  human  beings  are  imperfect  and  short- 
sighted; nor  can  all  of  them  be  improved  to  the 
extent  mentioned.  But  grant  that  this  were  pos- 
sible; it  would  be  greatly  to  be  desired.  In  such 
a  case,  the  change  in  relative  efficiency  of  various 

80 


THE  ABOLITION  OF  POVERTY 

groups  would  cause  some  readjustment;  but,  the 
total  efficiency  of  all  the  labor  force  having  been 
increased,  the  total  output  of  wealth  created  out 
of  our  resources  in  conjunction  with  capital 
would  be  greatly  augmented.  Thus  there  would 
be  more  than  before  to  be  distributed  amongst 
the  classes  from  A  to  E,  in  the  proportion  of  their 
relative  efficiency.  That  is,  as  elsewhere  ex- 
plained,1 the  contest  for  large  shares  lies  between 
different  classes  of  men,  as  physical  and  mental 
laborers  (E  being  the  class  of  skilled  organizers), 
and  not  between  labor  and  capital  as  such.  Any 
gain,  at  any  point,  in  industrial  efficiency,  there- 
fore, enures  to  the  advantage  of  society.  Like 
rain  in  a  period  of  drought,  it  cannot  fall  anywhere 
without  making  the  planted  crops  grow,  thus 
benefiting  the  single  farmer  as  well  as  the  neigh- 
bor with  whom  he  trades. 

(3)  At  this  point,  it  is  well  to  indicate  that  we 
have  a  duty  even  to  those  who  are  unwilling  to 
work,  to  those  who  are  "down  on  their  luck." 
One  is  not  yet  ready  to  believe  that  because  a  man 
stumbles  and  falls  he  will  be  unable  to  walk 
again.  There  is  no  doubt  that  we  have  here  a 
delicate  and  difficult  task,  if  we  hope  to  touch 

1  Chapter  II,  page  50. 
8l 


LATTER-DAY  PROBLEMS 

springs  of  action  in  those  who  have  lost  their  self- 
respect.  But  it  has  been  done ;  and  by  experience 
and  insight  it  can  be  done  again,  and  for  more 
persons.  It  is  impossible  in  this  brief  study,  to 
go  to  any  length  into  the  details  about  the  ex- 
periments which  have  been  more  or  less  success- 
ful in  this  respect.  Yet  there  are  practical  suc- 
cesses, which  are  enough  to  make  us  feel  that  we 
need  not  count  out  of  our  working  force  at  any 
time  all  those  who  at  first  show  a  disinclination 
to  work. 

In  the  main,  for  this  whole  class  of  the  lazy, 
dishonest,  and  degenerate,  there  should  be  en- 
forced care  and  work;  and,  above  all,  there  should 
be  watched  the  new  emphasis  now  being  given 
upon  training  men  to  be  the  guides  and  teachers 
of  this  class  of  persons.  It  is  a  new  and  distinct 
profession  for  which  economic  and  other  courses 
are  to  form  a  basis  for  their  professional  training. 

(4)  There  is  still  another  kind  of  instrument 
within  our  reach.  Any  one  familiar  with  in- 
dustry cannot  fail  to  notice  the  advantage  given 
to  the  possessor  by  a  sum  of  capital,  be  it  large  or 
small.  Specifically  it  gives  him  power  over  the 
future;  and  yet  it  has  the  magic  of  all  things  in 
the  hand  as  against  those  in  the  bush.  It  is 

82 


THE  ABOLITION  OF  POVERTY 

power,  to  be  used  for  good  or  for  ill.  Therefore, 
if  we  wish  to  aid  the  very  poor,  we  should  try  to 
help  them  become  capitalists.  This  may  sound 
aggravating  to  those  who  are  as  yet  struggling  for 
mere  existence;  but,  in  spite  of  possible  scepticism 
on  this  point,  it  is  a  practical  matter  not  to  be 
overlooked.  The  attitude  to  saving  is  crucial; 
and  this  should  be  emphasized  in  spite  of  the 
prevalence  of  superficial  thinking  on  this  subject 
by  some  workers  among  the  very  poor.  Saving 
arises  from  the  ability  to  set  a  future  gain  above  a 
present  indulgence ;  and  it  is  a  point  of  view  neces- 
sary in  many  other  relations  in  which  the  very 
poor  find  themselves,  especially  in  the  practical 
question  of  the  control  over  births.  Once  get  the 
mental  attitude  of  saving  recognized,  the  result 
will  bring  a  gain  all  along  the  line.  Of  course, 
everything  depends  upon  what  kind  of  future 
gain  is  given  emphasis;  but  saving  and  its  bene- 
ficial results  are  not  to  be  disposed  of  because 
some  savers  are  likely  to  be  niggards.  It  is  no 
argument  against  the  principle  of  saving  that  a 
man  may  get  so  "near"  as  to  refuse  an  orange  to 
a  sick  wife,  or  store  up  money  for  the  sake  of  a 
pretentious  funeral;  for  this  is  not  true  saving. 
The  influence  of  saving  upon  character  is  great, 

83 


LATTER-DAY  PROBLEMS 

quite  apart  from  the  fact  that  the  possession  of 
even  a  little  capital  places  a  man  beyond  the  ill 
effects  of  temporary  unemployment.  And  the 
possibility  of  saving  exists  wherever  the  drink  or 
tobacco  bill  exists.  Finally,  the  possession  of 
capital  will  bring  reinforcements  to  the  wages  of 
labor,  and  helpfully  increase  the  stability  of  his 
position. 

(5)  In  close  connection  with  the  quality  of  self- 
mastery  required  in  saving,  it  is  to  be  noted  that  a 
gain  in  productive  efficiency — by  which  a  man 
may  rise  out  of  the  class  of  the  very  poor — is  largely 
a  question  of  character.  The  power  to  select  a 
definite  object  and  to  keep  to  it  without  being 
deflected  by  weakly  yielding  to  distracting  diver- 
sions is  a  condition  of  success  in  industry.  Such 
self-mastery  is  but  another  name  for  character. 
Indeed,  the  moral  purpose  behind  the  expendi- 
ture of  increased  wages  is  quite  as  essential  as  the 
material  gain  itself.  Therefore,  a  large  part  of 
the  philosophy  of  success  to  be  presented  to  the 
very  poor  is  a  grasp  upon  the  pivotal  things  in 
character.  Obviously  this  seems  like  academic 
preaching;  but,  at  least,  it  brings  out  the  truth 
that  the  problem  of  raising  the  very  poor  is  not  a 
matter  to  be  finished  in  the  twinkling  of  an  eye; 

84 


THE  ABOLITION  OF  POVERTY 

it  is  a  matter  of  time  and  patience.  Indeed,  as 
improvement  in  industrial  efficiency  is  so  largely 
a  question  of  character,  it  becomes  evident  that  it 
is  pretty  nearly  synonymous  with  making  people 
good.  In  this  task  the  church  has  been  engaged 
for  centuries,  and  men  are  not  yet  perfect.  Thus 
we  should  not  be  discouraged  if  plans  for  abolish- 
ing poverty  work  with  exceeding  slowness.  For 
instance,  it  is  not  to  be  assumed  that  the  gain  in 
industrial  efficiency  given  at  Hampton  or  Tuske- 
gee  will  be  lasting  unless  it  is  accompanied  by  some 
growth  in  a  moral  purpose. 

The  limits  of  space  obviously  prevent  the 
writer  from  giving  more  concrete  expression  to 
plans  for  the  aid  of  the  very  poor,  or  to  discuss 
experiments  already  undertaken.  It  has  seemed 
best  to  analyze  and  to  order  the  thinking  on  this 
subject  in  such  a  way  as  to  enable  us  to  apply 
general  tests  of  existing  or  proposed  methods,  and 
to  know  what  sort  of  new  schemes  should  be  or- 
ganized which  would  conform  to  the  demands  of 
sound  economics.  To  my  mind,  if  we  have  agreed 
that  gain  in  industrial  efficiency  is  a  means  of 
raising  wages,  through  increasing  the  demand  for 
that  labor  and  lowering  its  relative  supply,  it 
would  be  just  as  appropriate  to  use  taxation  for 

85 


LATTER-DAY  PROBLEMS 

this  result  as  it  would  be  to  use  it  for  the  establish- 
ment of  a  public  school  system,  for  the  construc- 
tion of  roads  and  bridges,  or  for  the  extension  of 
rural  delivery.  That  is,  encouragement  to  the 
accumulation  of  capital  by  postal  savings  banks, 
by  agricultural  loan  banks,  by  co-operative  build- 
ing societies,  or  the  wide  extension  of  industrial 
and  manual  training  at  the  public  expense,  should 
be  cordially  supported  in  the  interest  of  the  very 
poor.  Preparation  for  earning  a  livelihood  ought 
not  to  be  limited  to  arithmetic,  grammar,  and  the 
like.  And  this  must  go  hand  in  hand  with  a  wider 
diffusion  of  economic  instruction. 

In  conclusion,  it  cannot  have  escaped  the 
reader's  mind  that,  with  all  these  practical  schemes 
at  work,  there  would  still  remain  a  substratum 
in  Class  A  beyond  the  reach  of  improvement  be- 
cause of  native  incompetence,  stupidity,  or  flabby 
character.  What  nature  has  joined  together  man 
is  not  likely  to  put  asunder.  For  such  a  residuum 
there  will  remain  only  the  services  of  public  and 
private  philanthropy;  but  help  to  the  unfortunates 
is  to  the  fortunate  a  duty,  which  kindly  human 
nature  will  not  shirk,  in  a  community  where  hos- 
pitals, homes  for  incurables,  and  the  like  are  fast 
becoming  a  matter  of  course.  But,  if  we  are  able 

86 


THE  ABOLITION  OF  POVERTY 

to  reach  a  steadily  increasing  number  of  the  will- 
ing poor  by  means  of  our  economic  methods  and 
are  able  to  get  them  moving  toward  permanent 
self -maintenance,  we  shall  have  done  much  of  that 
which  is  humanly  possible. 


CHAPTER  IV 
SOCIAL  SETTLEMENTS 


THE  close  of  the  nineteenth  century  was 
marked  by  the  rise  of  an  unmistakable 
moral  sentiment  and  philanthropy.  The  air 
came  to  be  filled  with  an  ardent  altruism.  A 
glowing  idealism  began  to  mark  our  literature 
and  our  academic  activity.  Its  chivalrous  de- 
sire to  make  the  world  better  is  still  with  us,  and 
we  all  have  a  distinct  feeling  of  pride  that  our 
kind  have  been  able  to  bring  such  altruism  to 
fruition.  Whatever  the  exciting  cause — whether 
or  not  the  outcome  was  the  immigration  from 
England  of  the  fine  spirit  set  aflame  by  Maurice, 
Kingsley,  Green,  and  Morris — our  own  genera- 
tion here  has  felt  the  touch  of  a  passion  for  right- 
eousness the  like  of  which  has  not  been  known  for 
many  a  decade.  It  is  a  thing  to  be  proud  of;  a 
thing  which  increases  our  faith  in  man, — in  spite 
of  the  ugly  dragons  which  it  is  obliged  to  drive  out 

88 


SOCIAL  SETTLEMENTS 

of  its  pathway.  Possibly  the  sordid  meanness  of 
selfish  struggles  for  power  and  wealth  in  politics 
and  industry,  in  these  last  decades,  has  given  a 
need  to  which  this  spirit  was  an  immediate  re- 
sponse. This  zeal  to  make  bad  things  better  ap- 
peals to  all  of  us  high  and  low;  and  so  far  as  in  us 
lies  we  all  wish  to  help  on  the  coming  of  the  dawn. 
In  this  spirit,  which  aims  to  further,  rather  than 
to  hinder,  the  progress  of  kindness  among  men, 
and  to  spread  farther  and  extend  deeper  the  cura- 
tive processes  in  society,  it  will  be  permitted,  I  am 
sure,  to  examine  searchingly  the  aims  and  methods 
by  which  the  so-called  "new  philanthropy"  is 
trying  to  work  out  its  undeniably  lofty  purposes. 
No  doubt  any  one  who  attempts  to  question  any 
part  of  the  programme  is  in  danger  of  being  mis- 
understood and  of  being  vehemently  set  upon  as 
a  hostile,  cold-blooded,  and  unsympathetic  out- 
sider; but  even  at  that  risk,  one  who  is  really  in- 
terested in  seeing  the  reign  of  better  things  be- 
come a  permanent  condition  of  our  life  will  be 
justified  in  the  hope  that  he  will  be  at  least  granted 
the  possession  of  an  honest  purpose.  When  a 
dog-sledge  party  is  being  sent  to  rescue  a  lost 
explorer  in  the  arctic  snows,  it  is  not  hostility, 
but  real  vital  wisdom,  to  insist  that  the  expedition 


LATTER-DAY  PROBLEMS 

shall  go  with  food  and  supplies  sufficient  for  all 
possible  needs,  and  not  with  empty  sleds  driven 
only  by  excitable  enthusiasts. 

The  course  of  this  admirable  renaissance  of 
philanthropy  has  now  run  so  long  that  we  are  in  a 
position  to  take  stock  of  results,  and  to  put  the 
methods  to  some  tests  of  common  sense.  And  as 
the  finest  and  best  results  have  appeared  in  the 
social  settlements  planted  in  our  various  centres 
of  population,  they  will  be  the  subject  of  our 
examination.  Here  it  may  be  necessary  again 
emphatically  to  protest  against  any  possible  mis- 
interpretation of  one's  motives.  This  examina- 
tion is  made  in  an  honest  belief  that  the  usefulness 
of  such  institutions  may  be  increased,  and  not 
lowered,  by  forcing  a  kindly  and  thorough  dis- 
cussion of  their  aims,  methods,  and  limitations. 
If  any  and  all  discussion  is  regarded  as  an  indi- 
cation of  unfriendliness,  then  such  discussion  is 
all  the  more  necessary  as  a  means  of  breaking 
down  the  barriers  of  a  narrowness  that  is  unwill- 
ing to  bear  any  light.  The  crust  of  habit  in  any 
course  of  action,  especially  if  quasi-religious,  is 
not  always  a  sign  of  perfection.  And,  of  course, 
those  in  our  settlements  who  have  given  the  most 
real  service  to  others  are  the  very  ones  who  are 

90 


SOCIAL  SETTLEMENTS 

most  generous  in  welcoming  suggestions,  and 
most  anxious  for  any  criticism  which  is  construc- 
tive and  not  destructive.  For  no  one  could  pos- 
sibly wish  to  minimize  the  good  and  the  service 
which  some  splendid  characters  like  Samuel 
Barnett  and  Jane  Addams  are  now  doing  for  their 
fellow-men.  Any  way,  their  fame  is  too  securely 
founded  for  any  lesser  persons  to  detract  from  by 
word  or  implication,  even  if  they  wished, — which 
they  do  not. 

n 

At  the  very  outset  the  inquiring  mind  is  obliged 
to  ask  of  the  social  settlements:  What  is  the  ob- 
jective; and  what  are  the  conscious  means  of 
reaching  that  objective?  That  they  wish  to  do 
good  is  to  be  admitted  at  once;  but  that  is  not 
enough.  Intelligent  service  must  have  a  definite 
purpose.  More  than  that,  even  if  the  purpose  is 
clear,  and  all  agree  in  its  desirability,  it  is  of  great 
interest  to  know  by  what  methods  that  purpose 
is  to  be  reached.  Even  if  there  is  agreement  as 
to  the  end,  there  may  be  honest  differences  of 
^opinion  as  to  the  wisdom  of  specific  means. 

In  its  origin,  the  settlement  was  the  creation 

In  England,  although 


LATTER-DAY  PROBLEMS 

I  Toynbee  Hall  was  the  suggestion  of  an  English 
clergyman,  Mr.  Barnett,  the  initial  movement 
came  from  non-clerical  sources.  In  this  country, 
the  social  settlement  undoubtedly  came  forth  be- 
cause many  of  the  churches  were  either  sunk  in 
self-contented  inaction  and  not  doing  the  work  of 
practical  Christianity,  or  because  they  were  unable 
to  satisfy  the  upward  striving  of  the  masses  for 
better  ethical  guidance.  It  is  the  social  settlement 
which  has  stung  the  church  into  action,  not  the 
church  the  social  settlement.  And,  no  doubt,  the 
distinctly  religious  appeal  is  an  obstacle  to  suc- 
cess, especially  where  divers  nationalities  and  be- 
liefs are  crowded  together  in  the  poorer  districts. 
Therefore,  by  way  of  differentiation,  it  cannot  be 
said  that  it  is  the  aim  of  the  settlement  to  teach 
any  particular  religious  creed.  Possibly  the  real 
trouble  with  some  of  the  churches  is  that  they 
have  been  so  long  occupied  with  dialectics  about 
the  devitalized  tenets  of  theology  that  people  have 
reacted  against  all  creeds;  and  the  kindly  dis- 
posed have  gone  off  where  they  can  find  emphasis 
put  upon  the  introduction  into  conduct  of  an 

;i"  active  service  to  others.  If  it  be  assumed  that 
religion  is  a  way  of  introducing  into  conduct  a 
code  of  ethics  based  on  service  to  others,  it  may  be 

92 


SOCIAL   SETTLEMENTS 

said  that  the  settlement,  as  an  institution,  has,  to 
a  certain  extent,  superseded  (or  done  the  work  of) 
the  church.  By  divesting  service  to  others  of 
religious  dogma,  it  has  succeeded  in  drawing  into 
altruistic  work  those  who,  by  nature  or  training, 
were  not  likely  to  be  reached  by  the  church  of 
to-day. 

When  we  try  to  express  how  the  aim  of  service 
to  others  is  to  be  carried  out  in  the  settlement  we 
touch  the  crux  of  the  whole  matter.  ToynBecfc 
Hall  was  founded,  said  Barnett,  to  carry  a  message 
to  the  poor  expressed  in  the  life  of  brother  men« 
That  is,  if  new  ideals,  or  new  principles  of  ethics, 
were  to  be  implanted  in  those  who  had  wrong 
ideals,  or  none  at  all,  they  must  be  enacted  in  the 
lives  of  those  who  come  to  live  in  the  settlement. 
Edward  Denison  said  as  early  as  1867:  "  Those 
who  would  teach  must  live  among  those  who  are 
to  be  taught," — which,  after  all,  was  the  rule  of 
Loyola  for  the  Jesuits,  and  it  is  undeniably  true. 
It  may  be  said,  in  passing,  it  is  the  reason  why 
the  economic  education  of  the  Mississippi  Valley 
cannot  be  carried  on  from  New  England  or  the 
Atlantic  seaboard.  In  short,  the  distinctive  ad- 
vance on  the  methods  of  some  churches  consisted 
in  the  practical  means  of  bringing  into  contact  at 

93 


LATTER-DAY  PROBLEMS 

the  social  settlement  different  classes  of  society 
who  possessed  different  social  and  ethical  stand- 
ards, but  who  were  at  present  so  disassociated  in 
work,  residence,  and  education  that  they  were 
growing  apart.  This  separation  of  interests,  al- 
though due  to  increasing  population,  enlarged 
production,  the  growth  of  our  cities,  accumula- 
tion of  wealth,  and  other  such  forces,  was  never- 
theless the  cause  of  suspicion,  envy,  and  hatred, 
and  contained  in  it  the  possibilities  of  permanent 
class  consciousness  based  on  the  unfortunate  belief 
that  the  interests  of  the  classes  were  divergent. 
Anything  which  would  bring  about  a  better  un- 
derstanding between  the  rich  and  the  poor  would 
be  of  advantage  to  both:  the  rich,  or  the  employ- 
ing classes,  could  be  brought  to  see  the  point  of 
view  of  the  poor,  or  the  working  class,  and  thus 
be  enabled  to  know  why  they  did  what  to  them 
seemed  foolish,  or  inexplicable  things;  and  the 
poor  could  be  made  to  see  that  the  rich  were  not 
always  revelling  in  operas,  balls,  and  tables  of 
Levi,  but  that  many  of  them  were  human  beings, 
who  also  wished  to  help  others  wherever  a  sane 
and  practicable  method  were  shown  to  them;  and 
that  altruism  had  also  inspired  the  fortunate  to 
work  for  the  help  of  the  unfortunate. 

94 


SOCIAL  SETTLEMENTS 

ni 

The  aims  and  methods  of  social  settlements 
are  both  easy  and  difficult  to  state;  and  the 
reason  for  this  delphic  statement  is  not  far  to 
seek.  The  poverty  and  the  misery  of  many,  the 
existence  of  wrongs  in  industrial  and  municipal 
life,  the  hostile  strife  between  laborers  and  em- 
ployers, and  the  existence  of  vicious  practices  due 
to  a  low  moral  sense,  have  set  remedial  forces  into 
action.  The  settlement  represents  a  part  of  the 
crusade  for  industrial,  civic,  and  moral  improve- 
ment; while  the  movement  also  involves  the  very 
essentials  of  the  whole  problem  of  abolishing  poy^' 
erty.  It  is  easy,  therefore,  to  say  truly  that  the 
settlement  aims  to  advance  every  agency  which 
will  work  for  righteousness.  On  the  other  hand, 
the  aims  must  be  more  definite  than  this,  and  in 
addition,  definite  methods  ought  to  be  worked  out 
to  accomplish  the  practical  ends;  still,  it  is  diffi- 
cult to  express  with  great  exactitude  the  precise 
policy  of  the  settlement,  and,  a  fortiori,  the  pre- 
cise methods  to  be  followed  out.  In  fact,  almost 
all  the  leaders  in  settlement  work  agree  in  stating 
that  they  have  no  definite  policy,  and  they  also 
mention  the  diversity  of  problems  in  different 

95 


LATTER-DAY  PROBLEMS 

neighborhoods,  and  the  necessity  of  first  learning 
the  peculiarities  of  their  constituency  before  fixing 
on  any  definite  policy.  Yet,  while  the  particular 
work  of  each  settlement  may  differ  from  that  of 
another,  there  are  certain  general  aims  common 
to  all,  which  may  be  regarded  as  characteristic 
of  what  is  now  sometimes  called  a  "movement." 
The  whole  big  problem  attacked  is  that  of  mak- 
ing the  world  better.  How  the  church  has  pro- 
posed to  do  this  we  all  know;  and  we  know  the 
measure  of  its  success.  The  settlement,  however, 
has  a  fairly  definite  and  local  programme.  It 
hunts  out  the  spots  in  our  cities  where  there  is  the 
least  knowledge,  the  worst  conditions,  and  the 
greatest  lack  of  ameliorating  forces,  in  order  to 
introduce  the  practical  means  of  raising  the  ma- 
terial and  moral  standard  of  those  living  there. 
And  yet  it  must  act  under  the  guidance  of  some 
general  principles.  Its  purpose  is  wide — almost 
despairingly  wide.  On  its  economic  side,  it  must 
face  practically  the  whole  problem  we  discussed 
in  "The  Abolition  of  Poverty." l  But  it  includes 
more  than  this:  it  aims  to  cover  also  the  elevation 
of  the  moral  and  civic  standards  of  its  constitu- 
ency. This  is  the  reason  why  the  residents  are 

1  Chapter  III. 


SOCIAL  SETTLEMENTS 

sometimes  surprised  to  find  that  the  paving  of  an 
alley  is  tied  up  with  the  civil  service  reform  of  the 
city;  or  that  the  control  of  the  "white  slave" 
traffic  in  their  own  bailiwick  is  also  a  matter  of 
national  concern.  They  are  really  concerned  with 
principles  and  problems  of  general  import,  involv- 
ing many  fields  of  inquiry,  political,  economic, 
and  moral.  To  improve  the  race  is  a  staggering 
task,  but  idealists  do  not  shrink  from  any  task. 
One,  therefore,  watches  and  inquires  for  their 
policy  in  this  great  undertaking  with  a  fascinated 
interest  like  that  with  which  one  might  in  person 
follow  an  army  as  it  goes  into  action. 

What  is  the  strategy,  and  what  is  the  tactics  of 
this  settlement  army  ?  What  is  the  plan  of  opera- 
tions, and  how  is  the  plan  to  be  carried  out  ?  The 
purpose  is  to  overcome  evil  and  to  advance 
schemes  for  the  progress  of  society  in  industrial, 
civic,  and  moral  ways.  Here  we  are  met  with  a 
difficulty  at  the  start, — one  which  results  from 
the  fact  that  the  settlement  army  is  a  citizen  or 
volunteer  force:  there  is  no  organized  strategy. 
Here  and  there  are  some  conspicuously  fit  offi- 
cers, and  here  and  there  are  some  obviously 
unfit  ones.  From  the  fit  ones,  we  get  the  best 
idea  of  the  plan  so  far  as  it  has  been  evolved. 

97 


LATTER-DAY  PROBLEMS 

At  the  start,  they  will  tell  you,  they  think  the 
strategy  can  be  worked  out  only  by  experience 
in  the  field;  that  they  have  very  little  use  for 
economic  West  Points;  that  science  has  very 
little  help  to  give.  This  view  seems  to  apply 
not  only  to  the  discovery  of  the  ultimate  pur- 
pose, but  to  the  practical  methods  to  be  fol- 
lowed. Such  an  attitude  is  much  the  same — 
to  change  the  illustration — as  if  medical  progress 
should  be  expected  to  come  more  effectually 
from  physicians  engaged  in  actual  practice  than 
from  the  scientific  laboratories  of  Pasteur  or 
Erlich.  In  fact,  the  discovery  of  a  principle 
may — and  has — changed  the  whole  character  of 
therapeutics.  If  the  cause  of  a  disease  were  dis- 
covered in  a  new  microbe,  then  the  methods  of 
prevention  of  that  disease  would  be  radically 
changed  from  the  former  treatment. 

We  may  speak  similarly  of  the  great  central 
economic  problems  which  confront  the  resident 
of  a  settlement.  Of  these  the  chief  one  is  to  find 
the  principle  to  be  followed  if  we  should  hope  to 
raise  the  material  comfort  of  the  poorest  paid 
wage-receivers.  Poverty,  like  disease,  is  what  we 
hope  to  remove.  Is  this  end  to  be  reached  only 
by  the  work  of  residents  in  the  practical  experi- 

98 


SOCIAL  SETTLEMENTS 

ence  of  settlement  life,  or  by  the  study  of  trained 
economic  investigators — or  by  both  allied?  It  is 
obvious,  of  course,  that  settlements  are  not  the 
only  places  in  which  students  of  economics  may 
come  into  intimate  relationship  with  the  condi- 
tions of  the  very  poor.  Many  persons  who  have 
never  seen  a  settlement  may  yet  be  thoroughly  in- 
formed of,  and  closely  in  sympathy  with,  the 
struggle  of  the  lowly  for  a  better  existence.  Of 
course,  it  is  actual  experience,  no  matter  whether 
it  is  within  or  without  a  settlement,  which  is  to  be 
regarded  as  the  necessary  condition  of  a  correct 
prescription  for  the  economic  ills  of  society.  But, 
even  on  this  wider  ground,  may  it  not  be  asked 
whether  experience  is  the  sole  requisite  for  a  true 
insight  into  the  problem  of  correcting  these  ills? 
Immediately,  we  are  obliged  to  inquire  as  to  the 
qualities  of  mind  and  heart  which  are  needed  in 
such  a  search.  In  making  an  economic  analysis 
of  stated  facts,  and  in  rightly  arriving  at  causes,  it 
is  patent  that  a  thorough  economic  training  is  of 
the  first  importance.  No  one  in  his  senses  would 
think  of  allowing  an  untrained  layman  to  deter- 
mine whether  the  high  temperature  of  a  sick 
patient  were  due  to  typhoid  fever  or  to  appendi- 
citis. And  when  the  settlement  resident  is  re- 

99 


LATTER-DAY  PROBLEMS 

quired  to  pass  judgment  upon,  or  to  take  a  per- 
sonal share  in,  an  economic  dispute,  it  is  quite 
possible  that  an  error  may  be  committed,  unless 
the  person  is  competent  to  think  accurately  in  the 
subject  and  to  grasp  all  the  elements  of  the  prob- 
lem. To  follow  the  immediate  promptings  of  the 
heart  may  result  in  more  ill  than  good — and  only 
too  late  bring  the  conviction  that  after  long  years 
of  service  no  real  progress  has  been  made  in  solv- 
ing the  difficulty.  Mitigating  present  suffering — 
or  social  nursing — is  essential  to  any  bad  situa- 
tion; but  it  is  a  larger  and  better  task  to  work  out 
the  preventive  principle  lying  behind  the  facts  of 
suffering.  And  yet,  how  can  the  investigator  pos- 
sibly make  any  penetrating  study  of  causes  at 
work  in  a  bad  economic  situation  unless  he  can 
get  into  close  touch  with  all  the  facts?  There  are 
economists  who  spin  their  theories  in  the  closet, 
and  whose  symmetrical,  metaphysical  systems 
satisfy  all  the  demands  of  an  analytical  mind, 
except  to  explain  the  actual  facts  of  life.  On  the 
other  hand,  there  are  those  who  know  only  facts, 
and  who  have  no  power  to  classify  or  organize 
them,  or  to  discover  causes  at  work.  The  truth 
can  never  be  reached  by  either  class  of  these  ex- 
tremists. The  principles  needed  to  guide  us  in 

100 


SOCIAL  SETTLEMENTS 

the  complexities  of  daily  life  can  be  obtained  only 
by  those  competent  to  discover  causes  and  who 
are  also  in  a  position  to  get  all  the  results  of  ex- 
perience. To  stake  all  on  experience  is,  therefore, 
to  ignore  half  of  the  process.  This  is  the  old  dis- 
pute as  to  the  possibility  of  arriving  at  economic 
truth  solely  by  induction, — a  method  which  no 
longer  receives  much  support. 

Social  settlements  are,  of  course,  not  labora- 
tories where  the  hypotheses  of  cold-blooded  theo- 
rists are  to  be  tried  out  experimentally  at  the  ex- 
pense of  human  victims;  far  from  it.  But  they 
should  be  places  where  principles  of  economics, 
carefully  ascertained  by  sound  method,  should  be 
relied  on  and  applied  in  actual  conditions  as  they 
arise.  That  is,  the  settlement  needs  the  results 
of  economics  as  much  as  medicine  needs  the  re- 
sults of  the  scientific  laboratories.  It  is  wrong  to 
put  the  case  as  in  the  following  words:  "The 
settlement  stands  for  application  as  opposed  to 
research;  for  emotion  as  opposed  to  abstraction; 
for  universal  interest  as  opposed  to  specialization." 
There  can  be  no  safe  basis  for  application  and 
emotion  without  previous  research  and  study  of 
causes.  It  was  Arnold  Toynbee  himself  who  said 
"that  thought  and  knowledge  must  now  in  phi- 

101 


LATTER-DAY  PROBLEMS 

lanthropy  take  the  place  of  feeling" ;  and  also  that 
"if  we  cannot  live  by  bread  alone  neither  can  we 
subsist  solely  on  nectar  and  ambrosia."  * 

IV 

What,  then,  as  to  the  qualifications  of  the  usual 
settlement  resident  for  such  serious  work  as  deter- 
mining on  the  objective  to  be  followed  ?  Let  me 
disclaim  the  slightest  intention  of  depreciating  or 
of  even  speaking  in  a  possibly  patronizing  way 
of  zeal.  It  is  a  necessary  part  of  an  altruistic  ser- 
vice, and  it  deserves  our  respectful  admiration. 
But  zeal  alone  is,  as  every  one  knows,  not  enough 
for  this  social  duty.  Beyond  it  and  the  possession 
of  tact,  sympathy  and  moral  earnestness,  the  set- 
tlement guide  should  be  entirely  competent  to  act 
as  teacher  and  judge  in  the  complicated  economic 
questions  which  underlie  the  problem  of  improv- 
ing the  condition  of  the  very  poor;  or,  if  untrained, 
such  person  should  have  the  discretion  to  avoid 
becoming  a  partisan  and  assuming  the  whole 
matter  in  question  as  settled  by  those  only  who 
happen  to  be  nearest  and  most  emphatic  as  to 
facts  alone.  Not  infrequently  the  ranks  of  settle- 

•F.  C.  Montague,  "Johns  Hopkins  Univ.  Studies,"  vii,  pp. 
26,  a8. 

102 


SOCIAL  SETTLEMENTS 

ment  residents  are  filled  with  women  who  go  to 
the  settlement,  as  women  in  the  middle  ages  went 
to  the  cloister.  Besides  willingness,  there  is  often 
little  to  recommend  them  as  fitted  for  the  impor- 
tant tasks  before  them,  and  for  which  a  rigorous 
professional  training  should  be  exacted.  Indeed, 
the  practical  question  has  already  been  raised,  at 
least  in  one  university,  of  forming  a  special  course 
of  study  designed  to  prepare  persons  of  ability, 
having  an  altruistic  ambition,  for  a  career  in  prac- 
tical philanthropy.  Certainly,  the  day  of  untrained 
persons  in  social  nursing  ought  to  have  gone  by  as 
entirely  as  it  has  in  medical  nursing. 

All  that  has  been  said  may  have  been  regarded 
as  applying  only  to  subordinate  helpers,  and  not 
to  those  in  authority;  but  it  should  also  apply 
more  strongly  to  those  in  a  position  to  determine 
the  general  policy  of  a  settlement.  As  we  look 
over  the  field,  do  we  conclude  that  the  directors 
of  the  settlements  are  those  who  have  first 
shown  their  pre-eminence  by  ability,  training, 
and  approved  capacity  to  settle  serious  economic 
problems?  Nor  does  one  mean  by  this  to  exact 
agreement  with  any  obsolete  economics,  or  any 
preconceived  point  of  view,  but  the  ability  to  think 
in  the  subject  rationally  and  to  have  intellectual 

103 


LATTER-DAY  PROBLEMS 

grasp  on  serious  economic  topics.  Is  it  right,  or 
even  expedient,  to  give  the  entire  direction  of  the 
policy  of  a  settlement  to  a  person,  no  matter  how 
good  and  amiable,  who  has  had  no  thorough  train- 
ing in  economic  and  civic  studies — to  say  nothing 
of  hygiene  and  law?  The  head  of  a  settlement 
often  is,  but  should  not  be,  a  preacher  of  special 
tenets.  To  an  individual  that  may  be  allowed, 
but  not  to  a  director  of  an  institution  representing 
the  joint  activities  of  those  coming  from  poor  and 
rich  alike.  A  preacher  of  duty,  of  service  to  others, 
every  worker  must  be.  But  personal  vanity  and 
cock-sureness  should  be  sunk  in  public  duty;  and 
policies  should  be  determined  upon  only  after  care- 
ful discussion  by  judicial  persons  who  are  inter- 
ested in  narrowing,  rather  than  in  widening,  the 
gap  between  social  classes.  One  of  the  reasons  for 
the  lessening  influence  of  the  church  is  the  poor 
quality  of  some  of  the  clergy;  and  if  the  workers 
in  the  settlements  show  lack  of  training  and  abil- 
ity, their  institutions  also  will  surely  lose  prestige. 

v 

Keeping  in  mind  the  desire  of  the  settlement  to 
'bring  about  a  higher  level  of  satisfactions  for  the 
workingmen,  at  least  one  industrial  objective  is 

104 


SOCIAL  SETTLEMENTS 

to  assist  in  securing  "a  living  wage."  What  has 
the  method  based  on  experience  brought  forward 
to  accomplish  this  end?  Of  course,  the  same 
policies  are  not  followed  in  all  settlements,  since 
the  individual  views  of  the  person  who  dominates 
the  institution  are  usually  reflected  in  the  special 
forms  of  activity;  but  the  attitude  toward  wages 
and  the  unions  is  more  or  less  the  same  in  many 
settlements.  Perhaps  the  common  form  of  in- 
terest is  in  the  struggle  of  the  poor  to  better  their 
material  condition.  Obviously  this  is  to  be  ac- 
complished through  higher  wages.  Then,  what 
methods  have  the  most  intelligent  leaders  in  the 
settlement  movement  suggested  for  this  purpose? 
Although  no  two  persons  would  state  the  method 
alike,  yet  there  is  a  prevailing  attitude  character- 
istic of  the  current  thinking  in  and  about  settle- 
ments— and  that  is  the  recourse  to  legislation. 
Just  as  the  labor  element  try  to  force  an  eight-hour 
day  by  legislation,  so  throughout  the  settlements 
one  hears  often  the  wish  to  ^st§J^][jsh  a  minimumir 
wagfiJjyJ^gislation.  Recourse  to  law  to  change 
industrial  conditions  is  evidently  popular.  Apropos 
of  the  anthracite  strike,  if  peace  had  been  main- 
tained, it  was  suggested  that  public  sympathy 
would  have  urged  legislation  on  the  minimum 

105 


LATTER-DAY  PROBLEMS 

wage,  after  the  manner  of  New  Zealand.  Here 
we  have  an  example  of  the  results  following  from 
the  methods  arrived  at  by  experience. 

It  is  precisely  in  such  a  case  that  the  method 
by  experience  needs  correction  by  science  and  a 
wider  knowledge  of  principle.  Time  and  again 
economics  has  shown  that  legislation  is  futile,  if 
not  in  accordance  with  the  economic  laws  of  the 
market.  Nor  does  one  have  to  go  far  afield  to 
discover  that,  if  wages  have  fallen  below  a  living 
rate,  it  is  not  merely  a  question  of  demand ;  it  is 
also  a  question  of  supply.  If  the  supply  of  un- 
skilled labor  is  so  abundant  at  a  particular  point 
of  competition  in  a  city  district  that  pitiable  con- 
ditions result,  it  is  no  remedy  to  legislate  as  to 
what  wages  ought  to  be.  Laws  fixing  the  prices 
of  goods  or  of  labor  are  now  regarded  as  the  evi- 
dence of  a  mediaeval  mind.  If  wages  are  too  low, 
they  can  be  raised  either  (i)  by  reducing  the  sup- 
ply of  competitors,  or  (2)  by  increasing  the  de- 
mand for  labor.  By  reducing  supply  is  not  meant 
massacre,  but  the  transfer  to  other  points  where 
supply  is  short,  or  the  elevation  of  the  worker  by 
increasing  his  industrial  productivity.  To  fix  a 
legal  minimum  wage  is  merely  to  transfer  to  the 
user  of  labor  the  responsibility  for  the  excess  of 

106 


SOCIAL  SETTLEMENTS 

supply  of  labor  over  which  he  has  no  control.  We 
all  wish  that  the  laboring  man  should  have  in- 
creased consumption,  and  no  one  is  cold-blooded 
and  unsympathetic  who  insists  that  this  increased 
consumption  cannot  be  obtained  by  legislation, 
but  by  conformance  to  laws  which  permanently 
regulate  the  price  of  labor.  As  explained  else- 
where,1 increased  consumption  is  a  function  of 
increased  productivity,  or  an  increased  demand 
relatively  to  supply  of  that  particular  kind  of 
labor.  This  view  is  not  the  outcome  of  an  indi- 
vidualistic philosophy  any  more  than  the  law  of 
gravity  is  individualistic.  But  it  is  a  definite  cor- 
rection which  science  can  make  to  any  induction 
from  experience  alone  which  seems  to  rely  on 
legislation  as  a  means  of  securing  results. 

There  is,  however,  an  allied  matter  on  which 
the  settlements  are  clearly  in  the  right,  and  in 
which  they  are  likely  to  be  of  great  service.  One 
way  of  influencing  the  productivity  of  laborers  is 
through  a  modification  of  their  standard  of  living. 
It  is  not  a  hopeless  or  unsympathetic  mind  which 
believes  that  improvement  is  within  the  control  of 
the  laborer  himself;  and  that  permanent  progress 
is  most  likely  to  come  in  this  way  rather  than  by 

1  Chapter  III,  p. 
107 


LATTER-DAY  PROBLEMS 

external  influences  such  as  legislation.  And  yet 
the  dual  nature  of  the  problem  is  such  that  en- 
vironment as  well  as  internal  change  is  effective. 
The  rise  of  the  standard,  to  be  sure,  is  largely  a 
matter  of  character  and  morals.  Although  its  re- 
sults are  economic,  the  forces  affecting  the  change 
of  standard  are  mainly  un-economic.  Here,  then, 
we  have  a  field  for  the  fullest  activity  of  the  settle- 
ment; and  one  of  the  expressed  aims  of  the  settle- 
ment has  been  to  raise  the  standard  of  living.  In 
a  very  important  way,  so  far  as  the  standard  can 
be  touched  by  environment,  legislation  is  a  power- 
ful help;  and  all  ethical  and  idealistic  impulses, 
emotion  and  stimulus  to  the  heart,  have  here  an 
undisputed  place.  It  is  possible  that  the  matter  of 
Changing  the  standard  is  the  chief  and  most  useful 
function  of  the  social  settlement.  Indeed,  it  gives 
the  key  to  such  a  plan  as  that  of  Toynbee  Hall. 

No  doubt  many  who  have  passed  out  of  the  sor- 
did byways  of  Whitechapel  into  the  artistic  and 
cultured  atmosphere  of  Toynbee  Hall  have  tried 
to  formulate  the  principle  by  which  the  residents 
influenced  the  life  of  the  neighborhood.  Would 
not  the  injection  of  men  living  a  life  of  culture  and 
comfort  into  a  region  of  poverty  and  misery  only 
aggravate  differences?  Toynbee  himself  hoped 
1  108 


SOCIAL   SETTLEMENTS 

to  dedicate  his  life  to  the  "social  expression  of 
culture."  Obviously,  the  existence  of  these  cul- 
tivated Oxford  men  in  Whitechapel  does  not 
directly  raise  the  wages,  or  increase  the  consump- 
tion, of  the  poor.  But  their  very  presence  there, 
without  patronizing,  unmistakably  sets  before 
those  who  have  not  had  it  a  sample  of  democratic 
helpfulness  and  fulness  of  life  which  must  help 
in  the  formation  of  a  higher  standard  of  living. 
The  man  who  comes  from  a  damp  basement  tene- 
ment to  the  warm  parlors  and  cheerful  club-rooms 
of  Toynbee  Hall  will  get  a  stimulus  toward  trying 
to  improve  his  own  lot.  More  than  that,  he  will 
get  a  helping  hand  and  intelligent  assistance.  If 
the  spirit  of  improvement  is  introduced,  the  prac- 
tical means  of  carrying  it  out  is  sure  to  be  found 
in  one  way  or  another.  Therefore,  to  the  extent 
that  the  settlement  is  creating  a  new  spirit  of 
progress  and  improvement  it  has  an  unquestioned 
future.  Given  the  purpose  which  is  to  be  put  into 
action,  the  really  difficult  question  is  as  to  how 
the  purpose  may  be  carried  out.  If  the  concrete 
methods  be  asked  for,  according  to  which  the 
poor  are  to  get  higher  material  rewards,  then  the 
aid  of  economic  training  is  essential.  The  prin- 
ciples by  which  men  progress  up  the  scale  of  wages 

109 


LATTER-DAY  PROBLEMS 

and  comfort  cannot  be  settled  by  emotion  as  op- 
posed to  research. 

It  is,  moreover,  the  function  of  the  settlement 
residents  to  put  principles  to  concrete  tests. 
They,  more  than  most  others,  are  placed  where 
they  must  have  practical  results.  Examples^of 
Effective  work  by  the. settlement  are  found  in  the 


enforcement  of  sanitary  and  smoke  ordinances, 
n  meat  inspection,  in  laws  to  secure  proper  fire 
escapes  in  factories,  and  to  obtain  protection  to 
workmen  from  dangerous  machinery.  Metaphys- 
ical abstractions  are  useless;  principles  must 
be  translated  into  rules  of  action  for  every-day 
life.  The  mechanic  in  the  shop  comes  to  know 
whether  a  tool  does  its  work  well  or  not;  yet 
he  may  not  know  the  principles  of  the  science 
of  thermodynamics  or  electricity  by  which  his  tool 
was  constructed.  So,  very  often  a  settlement 
worker  may  accomplish  good  results  under  good 
principles,  without  knowing  much  as  to  the  con- 
structive processes  by  which  the  principles  were 
arrived  at.  Although  some  mechanics  are  in- 
ventors, few  could  have  devised  the  machine  they 
work  with;  and,  likewise,  while  some  residents 
may  have  capacity  and  training  to  work  out  a 
constructive  policy,  the  most  of  them  must  accept 

no 


SOCIAL  SETTLEMENTS 

the  role  of  following  the  rules  laid  down  by  their 
leaders.  In  the  main,  to  bring  into  contact  ele- 
ments which  are  of  mutual  benefit,  and  to  mediate 
between  alienated  classes,  so  that  common  bonds  of 
interest  and  feeling  are  established,  are  important 
things  for  the  content  of  any  community.  The  aim 
is  right,  even  if  errors  are  made  in  carrying  it  out. 
Even  though  the  settlement  wishes  to  bring 
about  larger  material  rewards  for  the  poor,  and 
even  though  it  aims  especially  at  raisjng^the 
,  it  consciously  plans  to  do  more. 


Civic  and  moral  ends  are  always  in  its  programme. 
As  a  result  of  seeing  much  of  those  who  are  least 
happy  and  comfortable,  the  resident  gets  no  ex- 
alted idea  of  the  existing  industrial  organization. 
Consequently,  a  reaction  in  favor  of  a  better  in- 
dustrial system  is  likely.  The  present  form  of 
society,  tried  under  conditions  due  to  the  imperfec- 
tion of  mankind,  is  almost  certain  to  be  contrasted 
with  another  form  of  society  conceived  under  ideal 
conditions  such  as  would  follow  a  perfected  human 
nature.  Hence,  there  is  in  the  settlement  a  not 
infrequent  sympathy  with  socialism.  If  settle- 
ment residents  are  not  avowed  socialists,  yet 
avowed  socialists  always  find  a  congenial  atmos- 
phere in  the  settlement. 

in 


LATTER-DAY  PROBLEMS 

Most  of  our  settlements  are  placed  where  they 
must  deal  with  masses  of  newly  arrived  immi- 
grants. Indeed,  the  questions  centring  about 
immigration,  their  care  on  arrival,  the  protection 
of  women,  the  duty  of  giving  them  intelligent  civic 
instruction,  and  the  like,  are  constantly  empha- 
sized by  those  in  direction  of  settlements.  Perhaps 
one  of  the  most  praiseworthy  qualities  in  a  settle- 
ment worker  is  that  of  sympathy,  and  the  ability 
to  show  a  stranger  that  his  point  of  view  is  under- 
stood. In  thus  opening  the  mind  to  what  is  pass- 
ing in  the  foreigner's  thoughts  and  feelings  the 
settlement  worker  comes  into  close  contact  with 
all  the  forms  of  antagonism  to  government  of  the 
autocratic  kind  now  existing  in  the  countries  of 
the  immigrants'  nativity.  Obviously  the  most 
pronounced  type  of  that  antagonism — especially 
when  it  cannot  be  continued  against  our  free  in- 
stitutions as  it  was  against  European  absolutism 
— takes  the  form  of  socialism.  The  newcomers, 
fresh  from  the  activity  of  foreign  agitation,  are  full 
of  socialistic  doctrines  especially  of  the  meta- 
physical sort.  The  settlement  resident  may  listen 
sympathetically  to  the  eloquent  analysis  of  the 
wrongs  of  capitalism,  hear  difficult  economic 
propositions  glibly  discussed  and  disposed  of, 

112 


SOCIAL  SETTLEMENTS 

hospitably  encourage  full  and  free  discussion,  and 
give  rooms  for  the  meeting  of  any  and  all  kinds  of 
thinking,  whether  socialistic  or  anarchistic.  There 
can  be  no  real  dissent  from  the  wisdom  of  this 
method;  for  free  discussion  is  doubtless  the  best 
preventive  of  radical  error.  But  how  as  to  the 
original  purpose  to  bring  about  a  better  under- 
standing between  different  classes  of  society?  Is 
this  to  be  accomplished  by  hearing  and  sympa- 
thizing with  only  one  class  in  society?  Does  free 
discussion  mean  the  presentation  of  only  one  side 
of  a  difficult  question  ?  When  the  radical  socialists 
newly  arrived  are  warmly  welcomed  in  the  rooms 
of  the  settlements,  do  they  hear  anything  of  the 
errors  of  Marx  or  of  the  impossibilities  of  social- 
ism? If  the  settlement  allows  itself  to  think 
only  in  terms  of  one  class,  and  in  antagonism  not 
only  to  another  class  but  to  all  organized  society, 
as  established  by  the  long  experience  of  the  race, 
then  it  is  certainly  not  creating  but  preventing  a 
better  understanding  between  different  parts  of 
society.  Such  a  situation,  of  course,  is  not  to  be 
found  in  all  settlements.  Whatever  this  tendency 
to  socialism  may  have  been  in  the  past,  it  is  quite 
evident- it Js,xery.<  much,  less  active  in  settlements 
at  the  present  time. 

"3 


LATTER-DAY  PROBLEMS 

VI 

Since  raising  the  standards  of  living  is  a  slow 
process,  it  would  be  natural  to  expect  that  atten- 
tion should  be  directed  tojmproyin^  the  quality  of 
nje^torJ^ojlJiie.  Perhaps  this  is  what  the  resi- 
dent has  in  mind  in  speaking  of  wishing  to  give  to 
the  hard  worker  more  life.  In  trying  to  ascertain 
the  purpose  of  social  settlements,  we  find  the  fol- 
lowing interesting  statement  from  Jane  Addams:  * 

"The  residents  are  actuated,  not  by  a  vague 
desire  to  do  good  which  may  distinguish  the  phi- 
lanthropist, nor  by  that  thirst  for  data  and  analysis 
of  the  situation  which  so  often  distinguishes  the 
'  sociologist,'  but  by  the  more  intimate  and  human 
desire  that  the  working  man,  quite  aside  from  the 
question  of  the  unemployed  or  the  minimum  wage, 
shall  have  secured  to  him  powers  of  life  and  en- 
joyment, after  he  has  painstakingly  earned  his 
subsistence;  that  he  shall  have  an  opportunity  to 
develop  those  higher  moral  and  intellectual  quali- 
ties upon  which  depend  the  free  aspects  and  values 
of  living.  Thus  a  settlement  finds  itself  more  and 
more  working  toward  legal  enactment,  not  only 
on  behalf  of  working  people,  and  not  only  in  co- 

1  "Annals  of  the  American  Academy,"  May,  1899,  p.  50. 
114 


SOCIAL  SETTLEMENTS 

operation  with  them,  but  with  every  member  of 
the  community  who  is  susceptible  to  the  moral 
appeal." 

In  similar  vein,  it  is  declared  that  it  is  the  aim 
of  the  settlement  to  express  the  meaning  of  "life" 
in  forms  of  activity;  and  we  also  meet  the  idea 
that  what  men  want  is  "life  and  not  theories  about 
life." 

It  is  obvious  that  we  should  know  what  is  meant 
by  "life."  That  is,  what  moral  ideas  are  con- 
veyed by  this  expression?  Such  an  object  is 
clearly  ethical;  and  the  ethical  code  is  briefly  con- 
tained in  the  word  righteousness.  Whose  con- 
ception of  life,  and  whose  idea  of  right  and  wrong 
are  to  be  expressed  ?  In  actual  fact,  of  course,  it  is 
the  conception  of  the  one  individual  who  has  the 
force  to  lead  in  any  given  situation.  Grant  that 
we  wish  to  secure  for  the  workmen  powers  of  en- 
joyment and  the  opportunity  to  develop  higher 
moral  and  intellectual  qualities,  by  what  definite 
steps  can  these  things  be  gained?  Again,  it  is 
hinted  that  tla&^fiectija^^  Cer- 

tainly many  things  in  a  bad  environment  can  be 
bettered  by  legislation;  but,  on  the  other  hand, 
the  weaknesses  of  heredity  cannot  be  thus  re- 
moved. In  fact,  the  problem  of  abolishing  wrong 

"5 


LATTER-DAY  PROBLEMS 

is  beyond  the  powers  of  legislation,  and  can  be 
fundamentally  touched  only  by  work  which  will 
change  the  ideals  and  character  of  specific  per- 
sons. It  is  a  moral,  not  a  legislative  process;  it 
must  work  from  within  and  not  from  without. 
The  prevalence  of  the  policy  of  resort  to  legislation 
as  a  cure  for  industrial  evils  is  characteristic  of  the 
day,  if  it  is  not  also  characteristic  of  the  settlement. 
More  than  this,  it  is  said  that  the  group  of 
toilers  have  in  many  respects  a  different  ethical 
code  from  that  of  the  well-to-do.  The  former  are 
readier  with  their  sympathy  and  less  selfish  and 
more  generous  than  the  latter.  The  cautious  and 
reserved  policy  of  a  well-fed,  well-educated  charity 
visitor  as  against  the  quick  responsiveness  of  the 
poor  is,  perhaps,  evidence  of  the  emphasis  on  fore- 
sight which  partly  accounts  for  the  present  differ- 
ence in  the  relative  conditions  of  each.  The 
fable  of  the  ant  and  grasshopper  is  old.  But, 
further  than  this,  the  two  groups  are  said  to  differ 
in  their  ethical  attitude  on  primary  questions. 
Yet,  in  the  main,  one  very  much  doubts  if  the  two 
groups,  such  as  the  employers  and  employees,  can 
be  separately  classified  on  the  basis  of  a  different 
code  of  ethics.  The  laborer  is  set  on  gaining  his 
end  in  the  struggle  for  higher  wages;  so  is  the 

116 


SOCIAL  SETTLEMENTS 

employer  in  holding  his  own  for  the  accumulation 
of  wealth.  Both  are  actuated  by  selfish  motives, 
and  many  in  both  classes  are  apt  to  depart  from 
what  is  right.  There  is  no  monopoly  of  right  and 
justice  on  either  side.  One  man  sins  in  disre- 
garding his  duty  to  his  operatives,  the  other  in 
his  duty  to  his  employer;  one  keeps  his  men  for 
long  hours  in  unsanitary  rooms,  the  other  will 
make  work  and  throw  biting  acid  on  his  enemy's 
horse.  As  soon  as  a  workman  comes  up  from  the 
ranks  and  becomes  a  successful  boss  over  others, 
he  shows  the  same  disposition  to  bully  and  take 
advantage  of  his  laborers  which  he  so  resented 
when  he  was  the  under  dog.  The  moral  regenera- 
tion needed  should  reach  both  those  above  and 
those  below.  The  moral  line  cannot  be  drawn 
between  the  employer  and  the  employed. 

Back  of  all  the  ethical  differences  is,  undoubt- 
edly, the  feeling  that  the  worker  is  not  receiving 
his  just  distributive  share.  Hence  he  may  regard 
as  justifiable  what  to  others  is  hitting  below  the 
belt,  because  in  a  limited  knowledge  of  the  world 
it  seems  essential  to  the  success  of  his  purpose. 
This  case  discloses  clearly  the  true  relations  of 
economics  to  ethics,  of  research  to  emotion.  It 
is  not  possible  to  say  what  is  right  or  wrong  until 

717 


LATTER-DAY  PROBLEMS 

the  causes  and  effects  are  known ;  and  a  scientific 
analysis  is  as  necessary  to  a  basis  of  ethical  judg- 
ment as  is  the  cause  of  death  to  the  verdict  of  a 
coroner's  jury.  If  light-minded  persons,  incapable 
of  serious  economic  analysis,  get  a  wrong,  or  very 
superficial,  notion  as  to  the .  causes  producing  a 
pitifully  low  rate  of  wages  in  certain  instances, 
they  may  apply  emotion,  or  legislative  correction, 
in  a  way  to  cause  great  damage.  The  widest  ano\ 
deepest  insight  into  economic  distribution  is  a 
condition  precedent  of  any  correct  moral  judg- 
ment, or  of  a  programme  of  social  reform. 

It  is  a  matter  greatly  to  be  deplored,  if  philan- 
thropic zeal  be  stirred  up  and  applied  in  such  ways 
that  after  decades  of  effort  it  is  -reluctantly  to  be 
admitted  that  no  progress  has  been  made,  and  that 
the  same  old  conditions  exist  only  for  more  people 
than  before.  Unless  there  is  a  cordial  and  mutu- 
ally respectful  relation  between  economic  science 
and  social  reform,  there  is  not  likely  to  be  much 
permanent  good  accomplished.  Yet,  even  if  such 
a  relation  cannot  be  established,  the  settlement 
will  still  have  certain  fields  to  work  in  which  are 
certain  to  yield  good  fruit.  In  municipal  and 
social  reforms,  such  as  quickening  public  opinion, 
developing  neighborly  kindness  and  sociability, 

118 


SOCIAL  SETTLEMENTS 

lightening  drudgery  by  recreation,  and  aiding  in 
the  work  of  organized  charity,  the  settlement  has 
a  large  and  important  work.  But  in  industrial 
questions,  except  so  far  as  it  gives  industrial  and 
manual  training — which  can  be  carried  out  in  a 
comprehensive  way  only  by  the  public  itself  in  its 
corporate  capacity — the  settlement  cannot  hope 
to  do  much  to  raise  the  actual  level  of  wages  and 
comfort.  By  raising  the  standard  of  living  in 
spots,  to  be  sure,  some  indirect  influence  may  be 
exercised  on  the  rate  of  wages.  It  is  in  its  power, 
however,  to  do  a  higher  thing:  it  can  continue  its 
efforts  to  touch  the  conscience  of  the  community 
and  to  create  among  the  lowly  a  sense  of  the 
brotherhood  of  all  men.  Much  may  be  done  to 
establish  democratic  relations  between  all  our 
classes;  but  industrial  democracy  can  come  about 
only  when  there  is  a  generally  diffused  knowledge 
of  the  true  principles  affecting  the  incomes  of  so- 
ciety, so  that  a  comprehending  public  will  accept 
what  is  justified  by  intelligence,  and  so  that  some 
will  not  war  against  others  on  the  basis  of  preju- 
dice and  ignorance. 


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CHAPTER  V 
POLITICAL  ECONOMY  AND  CHRISTIANITY 


SCIENTIFIC  results  can  be  tested  in  no  way 
so  thoroughly  as  by  an  attempt  to  harmonize 
them  with  the  truth  gained  in  other  fields.  There 
can  be  no  dissonance  between  different  portions 
of  truth;  therefore,  when  the  economist  touches 
the  instrument  of  truth,  the  sounds  which  he 
evokes — if  he  be  a  true  performer — ought  to  blend 
together  harmoniously.  If  his  notes  produce  dis- 
cords, the  fault  is  with  him;  not  with  the  instru- 
ment. If  the  fundamental  principles  of  Political 
Economy  are  not  in  harmony  with  Christian  truth, 
it  is  more  than  likely  that  the  economist  is  wrong. 
Our  distinguished  botanist,  the  late  Asa  Gray, 
once  said  that  it  would  be  a  good  thing  sometimes 
to  have  a  sermon  addressed  from  the  pews  to  the 
pulpit.  If  such  a  sermon  would  give  the  ministry 
a  better  understanding  of  economic  principles  it 
would  be  a  protection  against  much  illogical  and 

120 


POLITICAL  ECONOMY  AND  CHRISTIANITY 

emotional  talk  on  economics  from  the  pulpit. 
But,  on  the  other  hand,  it  is  quite  as  important 
that  economists  should  consider  the  relations  of 
their  teaching  to  Christianity.  By  taking  their 
nuggets  to  the  assay  they  may  learn  how  much 
they  have  discovered. 

This,  however,  need  not  require  us  to  sympa- 
thize with  the  crude,  sentimental  writing  which 
chatters  about  the  inhuman,  cruel,  and  soulless 
character  of  Political  Economy.  If  this  study  ex- 
plains the  conditions  under  which  men  supply 
their  economic  wants  in  this  world,  then  it  is  no 
more,  no  less,  cruel  than  other  studies,  like  phys- 
ics and  chemistry,  which  explain  other  relations 
in  which  we  stand  to  the  material  world  around 
us.  To  know  these  conditions  does  not  relieve  us 
from  moral  responsibility  as  to  our  actions.  It  is 
not  a  cruel  thing,  for  instance,  to  explain  that  the 
velocity  of  falling  bodies  under  the  law  of  gravita- 
tion will  cause  the  death  of  a  child  that  falls  from 
a  fifth-story  window ;  but  it  would  be  inhuman  to 
coax  a  child  to  do  it,  or  to  let  it  fall  without  trying 
to  prevent  its  unconscious  action.  So,  likewise,  it 
is  not  an  inhuman  thing  to  explain  that  an  over- 
crowding of  numbers  will  result  in  want  and 
misery.  The  inhumanity  exists  in  the  act  which 

121 


LATTER-DAY  PROBLEMS 

causes  want  and  misery.  If  Political  Economy 
points  out  the  connections  between  cause  and 
effect  in  our  economic  conditions,  so  that  the  com- 
munity is  thereby  enabled  to  know  how  to  pre- 
vent want  and  misery,  it  becomes  the  forerunner  of 
practical  ethics.  By  laying  bare  the  causes  of 
things,  it  enables  all  the  powers  of  good  to  be  in- 
telligently applied  to  prevention  and  cure. 

Another  illustration  of  the  function  of  the  econo- 
mist may  not  be  amiss.  We  know  that  it  is  the 
chemist  who  studies  the  nature  of  a  drug  and  its 
action  on  the  human  body,  but  that  it  is  the  phy- 
sician who,  after  considering  such  facts  as  the 
patient's  constitution  and  habits  of  life,  decides 
when  it  is  right  or  wrong  to  use  this  drug  in  par- 
ticular cases.  The  economist  studies  the  nature 
of  economic  phenomena,  their  causes  and  effects; 
but  he  does  not — as  an  economist — necessarily 
address  himself  to  prevent  their  effects  or  to 
remedy  evils.  This  is  the  work  of  the  moral 
teacher.  It  is  true  that  economists  may  also  be 
moral  teachers,  as  were  Adam  Smith  and  John 
Stuart  Mill;  and  so  a  chemist  may  also  be  a  phy- 
sician; but  the  two  are  not  always  synonymous. 
A  man  who  sets  himself  up  as  a  moral  adviser  on 
social  and  economic  questions  must  be  pretty  well 

122 


POLITICAL  ECONOMY  AND  CHRISTIANITY 

established  in  his  economic  beliefs  to  have  an  easy 
conscience;  if  he  is  not,  he  assumes  the  criminal 
attitude  of  the  ignorant  druggist  who  compounds 
for  an  unsuspecting  patient  a  deadly  poison,  in- 
stead of  a  relieving  draught.  Many  of  our  an- 
archists are  like  these  ignorant  druggists. 

We  thus  see  that  the  responsibility  of  the  student 
of  economic  and  social  conditions  is  a  heavy  one. 
But  after  all  it  is  only  a  part  of  the  general  respon- 
sibility which  every  honest-minded  man  must  feel 
as  regards  his  relations  to  the  whole  world  around 
him.  The  morality  of  Christian  teaching,  on  the 
other  hand,  must  find  its  harmony  in  economic 
results,  or  the  Christian  teacher  cannot  accept  the 
laws  which  economists  lay  down.  A  responsibility 
thus  also  lies  on  Christians  to  be  sure  that  economic 
teaching  is  consonant  with  the  principles  of  Chris- 
tianity. And  it  is  on  this  point  that,  as  a  layman,  I 
should  like  to  address  a  short  sermon  to  the  pulpit. 


One  of  the  essential  ideas  of  Jesus's  life  and 
teaching  was  self-sacrifice.  Not  self-sacrifice  from 
the  pure  love  of  repression,  which  often  charac- 
terized our  Puritan  fathers,  but  the  renunciation 

123 


LATTER-DAY  PROBLEMS 

of  self  for  a  higher,  nobler  gain.  In  fact,  the  cul- 
mination of  His  life  in  a  painful  death  was  a  sub- 
lime act  of  self-sacrifice,  by  which  the  attention  of 
the  world  and  of  succeeding  ages  was  called  to 
the  higher  life  to  which  He  invited  them.  It 
taught  us  that  character  was  to  be  sought  by  self- 
control  ;  by  doing  that  which  was  right  against  our 
natural  inclinations;  by  loving  the  good  that  was 
in  others  even  if  they  had  wronged  us;  by  purify- 
ing the  human  and  earthly  parts  of  us  until  they 
were  more  or  less  altered  after  a  God-like  spirit; 
by  learning  the  superior  value  of  the  unseen, 
spiritual  good  over  the  seen  and  present  enjoy- 
ment. In  short,  the  power  of  Christianity  as  it 
moved  over  the  earth,  helping  on  civilization,  set 
in  the  mind  of  the  artisan  at  his  work,  the  sailor 
in  his  ship,  the  scholar  in  his  study,  the  orator  at 
the  forum,  the  secret  of  success  and  of  progress  by 
teaching  the  superior  value  of  the  unseen  over  the 
seen;  by  teaching  the  mind  to  picture  the  future 
which  is  seen  only  in  ideals  and  visions,  and  then 
to  sacrifice  present  enjoyments  for  the  sake  of 
realizing  those  future  ideals  and  visions.  Chris- 
tianity set  the  spiritual  over  against  the  material, 
the  unseen  over  against  the  temporary  and  seen; 
and  its  teachings  pointed  to  self-mastery  as  the 

124 


POLITICAL  ECONOMY  AND  CHRISTIANITY 

means  by  which  the  future  gain  was  to  be  real- 
ized. Charity,  kindliness,  good-will,  unselfishness 
were  to  be  followed  in  spite  of  the  fact  that  the 
flesh  holds  back  and  seems  a  stranger  to  the  higher 
motive. 

When  Christianity  sets  before  us  this  hope  of  a 
desirable  future,  and  draws  a  picture  of  the  higher 
life,  which  so  impresses  the  imagination  that  the 
power  of  the  material  present  loses  its  influence 
over  us,  it  is  then  laying  the  broad  foundation  for 
economic  prosperity  and  success  for  every  toiler  on 
this  earth.  In  fact,  we  find,  here,  that  in  our  efforts 
to  satisfy  material  wants,  the  fundamental  eco- 
nomic principles  are  but  statements  of  the  form  in 
which  Christian  ideas  take  shape ;  these  principles, 
in  other  words,  are  but  the  ducts  into  which  are 
drawn  off  parts  of  Universal  Truth,  and  this  truth 
comes  out  again,  reappearing  in  our  economic 
statements.  In  days  past  we  have  sometimes 
heard  contemptuous  criticisms  on  the  "  dismal 
science"  of  political  economy;  so  that  what  we 
have  just  said  seems  perhaps  to  be  an  audacious 
claim;  but  the  reader  is  asked  to  examine  briefly 
the  fundamental  laws  of  economic  production. 


125 


LATTER-DAY  PROBLEMS 

ill 

The  first  of  these  is  the  law  of  the  increase  of 
capital.  Capital  is  the  result  of  saving.  Now 
think  for  a  moment  what  saving  means.  In  Mr. 
Mill's  treatise  he  points  out  most  justly  that  "all 
accumulation  involves  the  sacrifice  of  a  present  for 
the  sake  of  a  future  good."  In  short,  economists 
generally  speak  of  foregoing  present  consumption, 
or  waiting,  as  a  necessary  condition  to  production 
— which  it  unquestionably  is.  Capital,  says  the 
economist,  increases  not  merely  because  of  the 
amount  of  interest  to  be  got  from  savings,  but, 
other  things  being  equal,  because  of  the  "effective 
desire  of  accumulation";  and  this  desire  to  accu- 
mulate, as  we  see,  depends  entirely  on  the  power  so 
far  to  grasp  hold  of  the  future  ideal  that  a  present 
enjoyment  will  be  given  up  in  order  to  realize  it. 
The  ability  to  weigh  the  future  against  the  present 
is  only  a  paraphrase  of  foresight,  of  prudence,  or 
saving.  Of  the  less  civilized  races  of  man — and  it 
is  no  less  true  of  the  lowest  strata  of  even  civilized 
countries — Mr.  Mill  says :  "  Man  may  be  said  to  be 
necessarily  improvident,  and  regardless  of  futurity, 
because,  in  this  state,  the  future  presents  nothing 
which  can  be  with  certainty  either  foreseen  or 

126 


POLITICAL  ECONOMY  AND  CHRISTIANITY 

governed.  Besides  a  want  of  the  motives  exciting 
to  provide  for  the  needs  of  futurity,  .  .  .  there  is  a 
want  of  the  habits  of  perception  and  action,  lead- 
ing to  a  constant  connection  in  the  mind  of  those 
distant  points,  and  of  the  series  of  events  serving 
to  unite  them."  These  principles  are  illustrated  by 
the  familiar  cases  of  the  St.  Lawrence  Indians  and 
the  Indians  of  Paraguay.  They  were  willing  to 
work  assiduously;  but  their  minds  were  so  weak 
in  imagination  that  they  did  not  see  a  future  end 
distinctly  enough  to  plant  only  the  little  crop  of 
potatoes  and  maize,  which  mature  at  a  short  in- 
terval of  time  after  the  planting.  For  the  same 
reason  the  Paraguay  Indians  cut  up  their  plough- 
ing-oxen  for  supper  at  the  end  of  a  day's  labor. 
From  this  analysis  of  motives,  economists  teach 
that  if  the  ability  to  sacrifice  present  enjoyments 
for  a  future  gain  is  absent,  little  capital  will  be 
saved  even  from  a  large  margin;  if,  on  the  other 
hand,  it  is  present  and  to  a  high  degree,  much 
capital  will  be  saved  even  from  a  very  small  margin. 
Consider  for  a  moment  how  this  applies  to  the 
workman,  who  owns  nothing,  lives  in  a  hired 
house,  and  is  only  a  receiver  of  wages.  What  are 
the  mental  processes  through  which  he  must  go, 
in  order  to  save?  On  the  one  side  are  the  seduc- 

127 


LATTER-DAY  PROBLEMS 

tions  which  urge  him  to  spend  the  whole  of  his 
wages  as  fast  as  they  are  earned;  his  pride  leads 
him  to  clothe  his  family  for  show  rather  than  for 
comfort;  he  is  fond  of  his  tobacco,  if  of  nothing 
worse ;  he  indulges  in  favorite  articles  of  food  and 
takes  certain  amusements.  On  the  other  side 
stands  the  estimate  he  places  on  a  home  of  his 
own;  on  the  little  piece  of  ground  which  he  can 
till  and  improve  at  odd  times;  on  the  possession 
of  a  cow,  and  the  additional  income  it  may  give; 
and  on  the  higher  standing  among  his  neighbors 
which  some  accumulation  will  bring  him.  Will 
he  care  enough  for  these  future  and  distant  gains 
to  sacrifice  his  present  enjoyments?  Often,  how- 
ever, he  has  no  training  of  mind  which  will  enable 
him  to  connect  distant  events  with  present  action. 
If  this  be  so,  how  far  are  the  friends  of  workmen 
strengthening  his  power  over  the  future;  are  we 
doing  all  we  can  to  present  a  vivid  picture  of  the 
fruits  and  gains  of  present  sacrifice?  And  here, 
it  seems  to  me  that  Christianity  is  the  necessary 
buttress  and  foundation  for  saving.  Has  the  man 
the  real  grasp  on  the  Christian  idea  of  self-sacrifice 
for  a  higher  aim,  of  estimating  the  unseen  against 
the  seen,  his  mind  will  find  it  easy  to  accomplish 
material  saving.  It  may  be  said  that  this  is  a 

128 


POLITICAL  ECONOMY  AND  CHRISTIANITY 

gross  aim,  and  far  from  the  spiritual  idea  of  the 
unseen;  that  to  save  for  a  material  recompense  is 
not  the  highest  form  of  self-renunciation,  not  equal 
to  that  renunciation  which  expects  no  return.  And 
this  is  true;  but  it  is  only  the  exercise  of  the  gen- 
eral principle  in  one  of  the  details  of  daily  exist- 
ence; and  if  material  riches  replace  want  with 
comfort,  misery  with  happiness,  that  is  not  merely 
a  material  gain. 

The  second  law  of  economic  production  to  be 
considered  is  the  law  of  population ;  and  this  can- 
not be  stated  independently  of  the  law  of  produc- 
tion from  land.  So  that  this  examination  really 
covers  the  three  fundamental  laws  of  production: 
the  laws  of  capital,  of  labor,  and  of  land.  The 
power  of  human  beings  to  multiply  is  such  that 
mankind  can  increase  faster  than  can  the  produce 
of  land.  If  no  restraint  hinder  it,  a  population  can 
double  itself  in  a  certain  period,  and  that  doubled 
number  can  again  double  itself  in  another  similar 
period;  while,  on  the  other  hand,  after  a  certain 
point  has  been  reached,  if  capital  and  labor  applied 
to  an  acre  of  land  produce  30  bushels  of  wheat,  a 
second  application  of  the  same  amount  of  capital 
and  labor  will  not  produce  an  additional  30  bushels 
on  the  same  acre,  or  60  bushels  in  all.  A  given 

129 


LATTER-DAY  PROBLEMS 

piece  of  land  cannot  increase  its  product  propor- 
tionally to  the  increased  outlay  of  labor  and 
capital;  else  why  cannot  all  the  food  of  the  Amer- 
ican people  be  drawn  from  one  county,  or  even 
from  one  farm  ?  The  physiological  power  of  man 
taken  in  connection  with  the  physical  qualities  of 
the  soil  furnishes  the  solid  basis  of  this  economic 
law.  This  relation  between  numbers  and  food 
has  been  pointed  out  by  economists;  and  it  is  this 
principle  which,  in  the  language  of  opponents, 
once  gave  the  opprobrious  title  of  the  "dismal 
science"  to  political  economy.  This  charge  of 
dismalness  has  arisen  from  the  statements  by 
economists  as  to  the  manner  in  which  the  power  of 
increase  has  been  actually  made  to  conform  to 
the  production  of  subsistence.  They  pointed  out 
that  a  thoughtless  increase  of  numbers  out  of  pro- 
portion to  the  increase  of  subsistence  among  peo- 
ple of  a  low  order  of  civilization  was  followed  by 
death  resulting  from  war,  famine,  or  pestilence; 
but  that,  as  men  had  advanced  in  civilization  and 
intelligence,  an  imprudent  increase  of  numbers 
was  prevented  by  a  lessening  number  of  births. 
In  such  ways  have  numbers  in  fact  been  kept 
down  to  the  actual  production  of  subsistence. 
This  is  the  contribution  to  political  economy 

130 


POLITICAL  ECONOMY  AND  CHRISTIANITY 

which  we  owe  to  a  clergyman,  the  Rev.  Thomas 
R.  Malthus. 

That  to  a  clergyman  this  economic  principle  may 
have  been  another  form  of  Christian  teaching  does 
not  seem  at  all  unnatural.  In  fact,  it  is  but  an- 
other expression  of  the  worth  of  the  future  as  com- 
pared with  the  present;  and  that  it  should  have 
been  the  object  of  attack,  and  designated  as  "un- 
christian" and  "  hopeless,"  is  one  of  the  many 
curious  facts  of  history.  When  men  were  able  so 
to  control  human  desires  that  they  might  better 
provide  comfort  and  happiness  for  their  families 
in  the  future,  they  were  displaying  the  ideas  of 
foresight  and  prudence,  which,  as  I  have  tried  to 
show,  are  so  fundamentally  connected  with  essen- 
tial Christian  teaching.  The  power  to  bring  the 
future  so  strongly  before  the  mind  that  the  present 
action  is  guarded  and  controlled  by  it  has  gone 
hand  in  hand  with  Christian  civilization.  In  re- 
gard to  the  expenditure  of  capital  for  distant 
returns,  as  in  docks,  bridges,  railways,  and  ma- 
chinery, we  have  seen  this  control  exercised  more 
frequently,  and  to  a  greater  and  greater  extent  as 
this  civilization  has  gone  on;  and  that  it  should 
have  shown  itself  also  in  other  forms  of  human 
activity  is  to  have  been  expected.  That  its  ab- 


LATTER-DAY  PROBLEMS 

sence  would  have  required  explanation,  should  be 
less  surprising  than  that  its  existence  should  have 
caused  bitter  attack.  As  men  grew  in  civilization 
they  gained  in  the  power  to  estimate  the  future  as 
compared  with  the  present;  and  numbers  were 
limited  by  foresight  to  correspond  more  nearly 
with  the  standard  of  living  of  different  classes. 
This  was  but  the  application  to  population  of  the 
power  of  the  Christian  teaching  of  a  regard  for  the 
future  over  the  present.  It  is  the  basis  of  advice 
which  an  economist  might  give  to  the  workman 
with  a  very  small  income  who  aims  to  improve  his 
position. 

The  law  of  population  to  which  I  have  just  re- 
ferred is  often  thought  of  as  harsh  and  inhuman. 
The  law  is,  however,  nothing  but  colorless  scien- 
tific truth.  In  stating  cause  and  effect  nothing 
whatever  is  implied  about  humanity  or  inhuman- 
ity. When  economists  say  that  unrestricted  in- 
crease of  numbers  among  the  very  poor  brings 
misery  and  want,  they  are  only  stating  the  relation 
of  cause  and  effect.  The  question  of  ethics  comes 
in  when,  knowing  this  principle,  men  disregard  it, 
and  throw  themselves  under  the  tyranny  of  a  des- 
potic law.  We  are  still  responsible,  not  only  for  our 
own  actions,  but  for  our  attitude  to  those  around  us. 

132 


POLITICAL  ECONOMY  AND  CHRISTIANITY 

I  have  said  that  as  men  grew  in  civilization  the 
inevitable  results  of  over-population  have  been 
avoided  by  prudence  and  foresight.  This  general 
principle,  however,  has  a  more  detailed  applica- 
tion. In  society  there  are  higher  and  lower 
classes  as  regards  prudence.  At  the  bottom  of  the 
industrial  strata  lies  the  largest  class,  composed, 
roughly  speaking,  of  unskilled  persons,  with  no 
capital,  little  education,  narrow  ideas,  and  nar- 
rower ambition.  This  class,  everywhere  among 
us  to-day,  is  relatively  to  the  more  prudent,  the 
"uncivilized";  they  have  little  power  to  sacrifice 
the  present  impulse  for  a  future  advance.  They  are 
the  class  to  which  the  law  of  population  gives  an 
important  aid  to  improvement;  it  is  simple  com- 
mon sense  to  say  that  three  children  can  be  better 
provided  for  than  seven.  Relatively  to  the  demand 
for  work  which  they  can  do,  this  class  is  enor- 
mously larger  than  any  other  class;  and  yet  it  is 
exactly  in  this  class  that  numbers  are  increased 
without  much  thought  of  the  coming  want  and 
misery.  The  amount  of  subsistence  offered  for 
work  which  the  unskilled  and  ignorant  can  do  is 
vastly  out  of  proportion  to  their  great  numbers. 
While  in  classes  of  skilled  persons  numbers  are 
fewer  relatively  to  the  demand  for  them,  wages  are 

133 


LATTER-DAY  PROBLEMS 

higher,  and  they  are  more  prudent.  So  that  fore- 
sight is  least  observed  in  the  classes  where  it  is 
most  needed,  and  is  most  observed  in  classes  where 
it  is  least  needed.  Political  economy  does  not 
teach  a  restriction  of  the  numbers  of  the  best,  but 
of  the  poorest  persons;  not  of  the  highest,  but  of 
the  lowest,  type.  The  limitation  of  numbers  to  a 
standard  of  living,  therefore,  is  to  be  applied  not 
merely  in  a  general,  but  in  a  detailed,  way  to 
different  classes  of  society.  To  the  poorest  and 
most  hopeless  this  economic  principle  carries  the 
Christian  teaching  of  the  wisdom  of  setting  asn 
estimate  of  the  future  above  the  estimate  of  the 
present. 

rv 

So  far  we  have  been  examining  the  laws  of  Pro- 
duction and  their  harmony  with  fundamental 
Christian  truths.  We  may  now  turn  to  the  ques- 
tions of  Distribution,  which  include  the  subjects 
of  wages,  interest,  and  rent,  and  bring  us  to  the 
burning  social  struggles  of  the  present  time. 

In  the  assignment  of. a  payment  to  the  owner 
of  natural  resources,  or  land,  there  is  little  of  an 
ethical  character — except  in  the  institution  of 
property  itself.  That  is,  so  long  as  society  be- 


POLITICAL  ECONOMY  AND  CHRISTIANITY 

lieves  that  more  good  than  evil  comes  from  grant- 
ing ownership  in  certain  gifts  of  nature  the  price 
for  the  use  of  such  gifts  depends  upon  bargains 
voluntarily  entered  into  between  the  owners  and 
those  who  wish  to  use  them.  If  these  gifts  are,  as 
in  most  cases,  limited  in  supply,  the  price  is  a 
question  of  monopoly  value.  If  the  demand  for 
wheat  and  wheat  land  increases,  the  price  of  wheat 
and  the  rent  of  wheat  land  will  rise — provided  there 
is  no  opening  up  of  new  lands,  or  no  improvements 
in  the  methods  of  treating  the  soil  which  will  have 
the  effect  of  increasing  the  supply.  Therefore,  in 
paying  rent  for  resources  limited  in  supply — due 
either  to  quality  or  location — there  is  no  more  play 
for  ethical  analysis  than  in  arriving  at  the  price  of 
any  other  commodity  in  the  open  market.  Of 
course,  rent  would  not  be  paid,  if  monopoly  con- 
ditions, either  natural  or  artificial,  ceased  to  exist; 
and  ethical  considerations  may  thus  arise  in  re- 
gard to  the  conditions  under  which  monopoly  ap- 
pears. For  instance,  some  may  hold  it  to  be  wrong 
to  allow  any  private  ownership  of  land ;  and  com- 
munal tenures  may  be  supposed  to  be  more  Chris- 
tian. Whatever  may  be  the  views  of  a  few,  the  fact 
remains  that  for  about  thirteen  centuries  our  race 
has  continuously  incorporated  in  its  customs  and 

135 


LATTER-DAY   PROBLEMS 

law  the  belief  that  private  ownership  of  nature's 
gift  makes,  under  certain  restrictions,  for  the  great- 
est good  of  all.  So  far  as  the  moral  qualities  of 
energy,  effort,  industry,  and  a  grasp  of  the  future 
arise  from  holding  possession  of  the  soil,  so  far  the 
institution  has  a  moral  justification.  And  only  so 
long  as  the  gains  from  private  ownership  exceed 
the  losses  can  the  right  to  private  property  find 
its  defense  on  moral  grounds. 


In  passing  to  the  payment  of  interest  for  the  use 
of  capital,  we  again  strike  moral  considerations. 
After  all  has  been  said  and  done,  it  must  be  ad- 
mitted that  the  accumulation  of  capital  is  the  out- 
come of  the  strongest  moral  forces  of  society.  This 
has  already  been  emphasized.  Without  the  moral 
grip  on  the  future  by  which  present  action  has 
been  controlled,  we  should  never  have  acquired 
the  present  marvelous  mechanical  equipment  of 
industry  on  which  the  existing  welfare  of  masses 
of  men,  high  and  low,  are  directly  dependent. 
Any  attempt  to  undermine  the  incentives  to  the 
accumulations  of  capital,  or  to  make  impossible 
just  payments  for  the  use  of  it  after  it  has  been 
accumulated,  aims  directly  at  the  moral  founda- 

136 


POLITICAL  ECONOMY  AND  CHRISTIANITY 

tions  on  which  much  that  is  best  of  existing  in- 
stitutions rests.  Envy,  or  ignorance,  in  these  days, 
appears  to  think  that  baiting  capital  is  an  act  of 
virtue.  Although  it  may  be  popular,  it  is  exceed- 
ingly stupid,  and  shows  a  lack  of  the  historical 
sense.  Moreover,  it  is  quite  aside  from  the  point. 
Capital  in  itself,  and  the  payment  of  interest  for 
its  use,  are  as  necessary  to  society's  comfort  and 
progress  as  are  air  and  sunshine  to  plant  life ;  and 
yet  there  is  more  or  less  revolutionary  muttering 
about  capitalism.  There  is,  however,  a  very  grave 
difference  between  capital  and  capitalism.  Here 
is  to  be  found  the  core  of  the  whole  matter.  Cap- 
italism is  obviously  the  relation  of  human  beings 
to  capital.  Capital  in  itself  is  what  every  one  de- 
sires; the  only  difficulty  appears  to  be  that  there 
is  not  enough  of  it.  But  the  attitude  of  owners  of 
capital  to  those  who  do  not  possess  it  seems  to  be 
the  cause  of  the  irritation.  It  is  not  capital,  but 
what  man  does  with  capital,  that  makes  the  real 
moral  issue.  To  inveigh  against  capital  itself  is 
like  finding  fault  with  the  superior  steamship 
which  carries  passengers  quickly  and  safely.  Then 
what  is  meant  by  the  wrongs  of  capitalism?  Re- 
duced to  its  lowest  terms,  it  seems  to  be  the 
wrongs  due  to  imperfect  human  nature  in  the  use 

137 


LATTER-DAY  PROBLEMS 

and  management  of  capital.  Obviously,  the  so- 
called  evils  of  capitalism  cannot  be  removed  by 
taking  away  the  incentives  to  saving,  nor  by  sub- 
tracting from  the  returns  to  foresight  and  pru- 
dence by  special  legislation  and  taxation  against 
capital.  The  evils  now  in  the  public  eye  can  be 
removed  only  by  removing  the  imperfections  of 
human  nature,  or  by  making  men  good.  Thus 
economic  analysis  finds  itself  in  complete  har- 
mony with  Christianity,  which  offers  the  means  of 
making  better  the  persons  by  which  capital  is  to 
be  employed.  There  is  not  only  no  conflict  but  a 
clear  agreement  between  the  economist  and  the 
Christian  worker — so  far  as  concerns  the  relation 
of  ftien  to  capital.  It  is  nothing  against  a  man 
that  he  is  saving  and  efficient  and  accumulates 
capital;  it  is  rather  against  a  man  that  he  is  thrift- 
less and  inefficient  and  has  no  capital.  It  is  nothing 
against  a  man  that  he  is  a  capitalist;  but  it  is 
against  him  if  he  is  a  dishonorable  man — capitalist 
or  non-capitalist — whether  he  reaps  where  he  has 
not  sown,  or  whether  he  robs  and  steals.  The  in- 
dictment runs  against  the  morality  of  the  man,  not 
against  the  tools  or  capital  he  uses.  We  do  not 
convict  the  knife,  but  the  assassin,  when  we  try  to 
exact  justice  against  a  murderer.  And  yet  in  the 

138 


POLITICAL  ECONOMY  AND  CHRISTIANITY 

confused  and  crude  thinking  of  the  day  about 
capitalism,  there  is  an  implication  that  the  system 
is  wrong  which  permits  private  ownership  of  cap- 
ital and  that  all  capital  should  be  placed  under  the 
control  of  the  state.  When  we  realize  that  saving 
of  capital  is  the  outcome  of  a  personal  process — 
or  at  least  of  non-consumption  by  individuals — we 
might  as  well  say  that  the  state  should  own  all  the 
pictures  painted  by  artists,  or  all  the  music  ever 
composed.  The  state  did  not  create  capital;  and 
it  could  not  own  capital  except  by  exploiting  it 
unjustly  from  individuals  who  brought  it  into 
existence. 

Possibly  the  literal  injunction  that  interest  is 
usury  and  unchristian  may  trouble  the  pious.  We- 
have  fully  shown  how  saving  is  in  essential  har- 
mony with  Christian  teaching;  if  so,  interest  is  no 
more  unscriptural  than  buying  and  selling  any 
useful  thing.  The  borrower  of  an  ass  would  be 
unchristian  if  he  did  not  pay  its  hire;  and  he  who 
hides  his  talent  in  a  napkin  and  puts  it  not  to  use 
where  it  would  earn  something  is  condemned  by 
the  scriptures.  An  ass,  a  horse,  or  wealth  in  the 
form  of  money,  are  common  instruments  by  which 
capital  is  invested,  and  for  which  interest  is  paid. 


139 


LATTER-DAY  PROBLEMS 
VI 

In  the  field  of  distribution,  it  is  in  the  burn- 
ing question  of  wages  and  human  effort  that  we 
find  the  most  obvious  problems  of  ethics;  and 
here  the  relation  of  Christianity  to  economic  teach- 
ing is  one  much  discussed.  The  pulpit  frequently 
speaks  of  the  wrong  implied  in  the  possession  of 
large  accumulations  of  capital  which  loom  big 
alongside  the  poverty  of  the  many.  The  implica- 
tion of  wrong  here  depends  entirely  on  the  assump- 
tion that  capital  is  accumulated  at  the  expense  of 
others.  If  it  is  possible,  however,  to  gather  large 
sums  honestly,  by  abstinence,  reinvestment,  and 
good  business  management,  then  no  one  else  is 
wronged;  in  fact  others  are  thereby  aided  in  get- 
ting employment.  On  the  other  hand,  if  men  grow 
rich  by  despoiling  others,  then  the  wrong  is  in  the 
man,  and  he  should  be  brought  to  book,  just  as  a 
burglar  or  common  thief  should  be.  One  might  as 
well  say  that  great  elms  are  wrong  when  seen 
alongside  of  little  newly  planted  saplings,  as  to  say 
that  large  accumulations  of  capital  are  in  them- 
selves wrong  while  men  are  still  poor.  A  great  elm 
is  no  reason  why  a  sapling  should  not  itself  in  time 
grow  great.  The  chief  wrong  is  that  the  many 

140 


POLITICAL  ECONOMY  AND  CHRISTIANITY 

have  not  yet  caught  the  spirit  and  ability  to  save 
and  invest  safely.  So  long  as  the  drink  and  tobacco 
bill  is  counted  in  untold  millions,  there  is  still 
room  for  the  poor  to  accumulate  capital  and  enjoy 
its  rewards  pro  tanto. 

The  payment  for  the  use  of  capital  in  produc- 
tion is  Interest;  the  payment  for  the  exertion  of 
labor,  is  Wages.  The  word  "profits"  is  a  mislead- 
ing term,  and  for  this  reason:  the  "profit"  of  a 
capitalist  is  commonly  used  as  if  it  were  due  to 
the  ownership  of  capital;  but  in  what  is  called 
"profit"  there  is  included  by  practical  business 
men  not  merely  the  interest  paid  for  the  use  of  the 
capital  invested,  but  an  additional  sum,  which  in- 
cludes what  is  distinctly  in  the  nature  of  wages  for 
services  as  a  manager  as  well  as  some  differential 
gains.  After  getting  a  dividend  on  his  capital,  every 
manager  also  expects  to  be  paid  for  his  services — 
just  as  every  moulder  or  carpenter  is  paid  for  his 
services.  These  two  payments  are  of  wholly  differ- 
ent kinds,  and  are  governed  by  different  principles. 
In  short,  the  manager  of  a  business,  whether  he 
owns  capital  or  not,  is  unmistakably  a  laborer;  and 
the  reward  for  his  exertion  is  governed  by  the  same 
principles  which  govern  the  share  of  the  different 
kinds  of  labor.  Interest  is  the  payment  for  the 

141 


LATTER-DAY  PROBLEMS 

ownership  of  capital;  and  although  interest  and 
wages  may  be  paid  to  the  same  man,  they  are  not, 
for  that  reason,  any  the  less  separate  and  distinct 
in  their  nature.  When  we  hear  people  talk,  then, 
about  a  "conflict  between  labor  and  capital,"  it 
ought  to  appear  in  the  struggle  for  the  relative 
shares  which  labor  and  capital  receive  out  of  the 
product.  But,  as  we  have  said,  the  share  of  labor 
is  wages,  and  the  share  of  capital  is  interest.  If 
there  is  a  conflict  between  labor  and  capital,  it 
ought  to  show  itself  in  the  relative  amounts 
assigned  to  wages  and  interest.  We  shall  find, 
however,  that  the  outcome  of  the  processes 
by  which  these  distributive  shares  are  deter- 
mined does  not  show  that  the  laborer  is  losing 
in  the  struggle. 

In  every  industrial  operation — as  now  carried 
on — we  know  that  a  supply  of  capital  as  well  as  a 
supply  of  labor  is  necessary.  They  are  as  neces- 
sary to  each  other  as  the  two  blades  of  a  scissors. 
Hence,  of  two  things  both  essential,  if  one  becomes 
abundant  relatively  to  the  other,  that  one  can 
exact  but  a  smaller  return  for  its  use,  and  the  one 
which  is  relatively  scarce  will  exact  a  larger  return. 
In  brief,  the  relative  shares  of  labor  and  capital 
will,  other  things  being  equal,  depend  upon  the 

142 


POLITICAL  ECONOMY  AND  CHRISTIANITY 

relative  scarcity  and  abundance  of  labor  and  cap- 
ital. If,  for  example,  immigration  should  add 
greatly  to  the  number  of  workingmen  in  the  United 
States  without  a  corresponding  addition  to  such 
capital  as  is  offered  in  the  form  of  employment,  then 
the  share  which  each  laborer  can  demand  will  be 
somewhat  less  than  before.  If,  on  the  other  hand, 
capital  offered  to  laborers  should  increase  more 
rapidly  than  laborers,  the  division  will  be  altered 
in  favor  of  the  laborer.  When  capital  is  abundant 
and  everywhere  seeking  employment,  you  find  that 
there  are  more  situations  offered  to  employees,  and 
wages  and  salaries  go  up.  If  business  is  bad,  and 
capital  is  timid,  employment  is  hard  to  find. 
Moreover,  the  competition  of  capitalists  with  one 
another  in  the  market  is  far  keener  than  the  com- 
petition of  laborers  with  one  another  for  employ- 
ment, great  as  that  is;  and  when  capital  grows 
rapidly,  the  fall  in  the  rate  of  interest  for  the  use 
of  capital  is  a  natural  result. 

In  spite  of  the  increasing  demand  for  capital  in 
recent  years  due  to  the  opening  of  our  new  re- 
sources, and  the  widening  opportunity  for  invest- 
ment, the  rate  of  interest  on  sound  investment  in 
the  United  States  has  been,  as  a  matter  of  fact, 
steadily  falling,  or  at  least  it  has  not  risen.  Every 


LATTER-DAY  PROBLEMS 


banker  can  give  evidence  on  this  point;  every 
depositor  in  a  savings  bank  has  found  this  out. 
The  high  rate  of  interest  on  capital  loaned  on 
Western  farm  mortgages  has  fallen.  At  least,  the 
proportional  share  of  capital,  for  its  use  in  pro- 
duction, has  not  risen.  There  is  absolutely  no 
question  as  to  the  fact.  If  then,  the  proportion 


Wages  of  Workmen 

Wages  of  Employer 
Interest 
FIG.  i 


which  interest,  BC  (Fig.  i),  bears  to  the  whole, 
AC,  has  not  risen,  the  amount  which  goes  to  labor 
as  wages,  AB,  has  not  decreased.  So  far  as  the 
"conflict  between  capital  and  labor"  is  concerned, 
the  conflict  does  not  appear  to  be  going  against  la- 
bor. One  cannot,  therefore,  believe  in  any  conflict 
between  labor  and  capital  in  this  sense.  The  facts, 
in  truth,  show  an  increase  in  the  money  wages  of 
labor  in  the  last  fifty  years,  a  decrease  in  the  hours 

144 


POLITICAL  ECONOMY  AND  CHRISTIANITY 

of  labor,  and  a  fall  in  the  prices  of  many  of  the 
articles  consumed  by  the  laborer. 

But  that  a  real  "conflict"  exists,  one  which 
causes  struggles  and  misunderstandings  and  a 
sense  of  wrong,  no  one  can  doubt  in  these  days  of 
labor  agitations.  We  must  admit  that  a  very  dis- 
tinct and  bitter  "conflict"  does  exist,  and  one 
which  we  are  not  to  get  rid  of  very  soon.  Let  us 
then  try  to  ascertain  where  it  is.  In  the  diagram 
(Fig.  i),  all  that  was  not  interest,  or  AB,  was  to 
be  divided  as  wages  among  different  classes  of 
laborers.  And  it  will  be  remembered,  also,  that 
we  regarded  the  manager  and  owner  as  a  laborer, 
who  gives  his  time,  ability,  experience,  and  execu- 
tive energy,  and  for  which  he  earns  wages,  apart 
from  any  interest  on  capital  that  he  may  have  in- 
vested. AB,  then,  is  to  be  divided  among  the 
various  classes  of  laborers.  One  does  not  find  in 
the  "labor  problem,"  as  it  is  called,  a  dangerous 
conflict  between  labor  and  capital,  because  inter- 
est, or  the  proportional  share  of  capital,  is  in  fact 
not  increasing;  and  the  absolute  rate  of  wages 
is  very  largely  affected  by  great  advances  in  the 
efficiency  of  production;  but  one  does  find  in  it  a 
conflict  of  laborer  with  laborer,  of  the  lower  against 
the  higher,  of  different  degrees  of  skill  against  each 

145 


LATTER-DAY  PROBLEMS 

other — or  the  same  venerable  conflict,  which  is  as 
old  as  society,  and  likely  to  last  as  long  as  men 
remain  unequal,  as  they  are,  and  have  been  in  the 
past. 

The  body  of  laborers  can  be  roughly  divided 
into  several  classes,  as  was  shown  in  a  former 
chapter.1  It  is  not  necessary  to  demonstrate  that, 


/ 

\ 

/        c 

\ 

\ 

/               A 

\ 

FIG.  2 

although  men  are  equal  politically,  they  are  not  all 
equal  in  capacity  or  training.  X's  vote  may  be 
as  effective  as  Y's,  but  X  may  not  begin  to  com- 
pare with  Y  in  the  management  of  a  great  factory. 
The  explanation  of  a  great  deal  of  social  philosophy 
based  on  the  right  of  a  man  to  enjoy  equal  wages 
with  every  other  man  in  the  community,  is  to  be 
found  in  the  strength  of  this  idea  of  political 
equality  in  the  eyes  of  the  State;  and  by  easy  logic 

1  Chapter  III,  p.  56. 
146 


POLITICAL  ECONOMY  AND  CHRISTIANITY 

it  is  supposed  to  be  equally  true  in  the  radically 
different  system  of  industrial  life. 

Now  the  distribution  of  AB  is  made  among  the 
various  classes  of  laborers,  A,  B,  C,  D,  and  E; 
and  all  these  classes  of  laborers  are  necessary  to 
production.  But  the  employment  offered  for  these 
classes  does  not  correspond  to  the  number  of  la- 
borers in  each  of  the  several  classes;  those  lowest 
down,  in  A,  form  the  largest  group  relatively  to 
the  demand  for  their  work,  and  the  competition 
of  a  large  body  of  men  within  their  own  group 
keeps  wages  low;  those  higher  up  are  less  in  num- 
ber by  reason  of  a  natural  or  artificial  monopoly, 
arising  from  the  possession  of  innate  or  acquired 
skill.  Those  in  B  are  less  numerous  than  those  in 
A,  because  it  is  necessary  that  they  should  exercise 
some  skill;  they  are  protected  from  the  competi- 
tion of  all  but  the  most  enterprising  men  in  A 
(those  who  want  to  rise  in  the  scale) ;  and  their 
wages  are  larger  on  the  average  than  those  in  A. 
And  so  of  the  other  classes,  mutatis  mutandis. 
There  are  less  of  the  highly  skilled  in  proportion 
to  the  demand  for  them  than  of  those  in  the  lower 
classes,  and  so  their  wages  are  higher.  At  the  top. 
in  a  number  smallest  of  all,  relatively  to  the  de- 
mand for  them,  are  the  capable  industrial  man- 

147 


LATTER-DAY  PROBLEMS 

agers,  or  "captains  of  industry" — who  receive 
high  wages  because  there  are  few  of  them.  The 
earnings,  nay  even  the  very  establishment  itself, 
depends  upon  their  management.  Because  the 
men  who  can  successfully  direct  an  insurance 
company,  a  bank,  a  factory,  or  a  railway,  are  few, 
their  wages  are  high.  It  is  a  natural  monopoly. 
Were  every  laborer  in  A  as  competent  as  every  one 
in  D  and  E,  he  would  get  as  good  wages  as  those 
in  D  and  E  could  get. 

After  this  brief  explanation  of  Wages,  let  us  now 
consider  some  of  the  relations  in  which  Christian- 
ity and  education  stand  to  it.  Is  there  in  the  fun- 
damental principles  of  economic  distribution  any 
place  for,  any  harmony  with,  Christian  teaching? 
To  me  it  seems  almost  superfluous  to  ask  such  a 
question.  Christian  teaching  and  education  have 
everything  to  do.  In  order  to  secure  redress  in 
the  "conflict  of  laborers"  they  are  the  very  forces 
upon  which  the  workman  must  always  rely.  The 
whole  labor  question,  considered  from  the  point  of 
view  of  social  reform,  consists  in  enabling  a  laborer 
in  A  to  mount  upward  in  the  scale  to  B,  and  C,  or 
even  to  E,  if  he  can. 


148 


POLITICAL  ECONOMY  AND  CHRISTIANITY 

vn 

So  far,  then,  we  nave  explained  the  general  eco- 
nomic principles  by  which  wages  are  allotted.  Now, 
let  us  leave  the  discussion  of  principles  and  con- 
sider what  actual  means  exist  for  raising  men  in 
this  scale.  Do  not  understand  me  as  thinking  that 
the  whole  duty  of  man  is  accomplished  when  his 
wages  are  increased;  for,  of  course,  there  are  other 
things  to  win  of  higher  value  than  mere  material 
wealth;  but,  still,  we  are  now  asked  to  consider 
the  differences  in  material  rewards  in  this  world, 
and  it  is  a  part  of  every  man's  life-problem  to 
study  them.  And  these  are  the  very  things  which 
are  to-day  in  everybody's  mind. 

Seeing  the  labor  problem  as  a  "conflict  of  la- 
borers," of  incapacity  against  capacity;  and  be- 
lieving that  as  men  rise  in  the  scale,  both  their 
wages  and  their  chances  of  a  further  rise  increase, 
I  have  already  suggested  in  Chapter  III  some 
practical  means  for  aiding  in  the  advance  of  work- 
ingmen.  Here,  it  may  be  permitted  to  confine 
ourselves  to  emphasizing  the  relation  of  Christian 
morals  to  the  elevation  of  the  workingman.  In 
truth,  they  lie  at  the  basis  of  industrial  progress. 
To  learn  how  to  adapt  one's  powers  to  a  given  end ; 

149 


LATTER-DAY  PROBLEMS 

to  obtain  self-mastery;  to  learn  how  to  regard  the 
future  as  above  the  present;  to  follow  the  higher 
and  the  unseen  to  which  better  motives  call  one; 
to  learn  to  do  what  is  disagreeable  and  repugnant 
to  one's  inclination,  provided  it  is  right  and  hon- 
orable; in  short,  to  acquire  character — this  will 
enable  a  man  to  rise  in  the  moral  scale,  "to  take 
up  his  bed  and  walk."  As  he  becomes  a  better 
man  morally  he  will  become  a  better  [man  indus- 
trially;  as  he  rises  he  gets  into  a  less  crowded  class; 
he  is  better  able  to  see  around  him;  and  so  he  learns 
to  rise  still  higher.  As  he  gains  one  advantage, 
that  becomes  an  additional  assistance  in  his  up- 
ward journey;  he  grows  in  power  as  he  advances. 
There  is  thus  in  economic  conditions  an  exact 
illustration  of  the  biblical  precept :  "For  he  that 
hath,  to  him  shall  be  given."  The  real  difficulty 
is  in  overcoming  inertia  at  the  start;  after  that  mere 
momentum  does  something.  And  it  is  equally  true 
that  self-mastery  must  not  be  intermitted.  Shift- 
lessness  and  intemperance  bring  their  swift  pun- 
ishment: "and  he  that  hath  not,  from  him  shall 
be  taken  away  even  that  which  he  hath." 

Yet  we  hear  it  repeated  from  many  mouths  that 
the  laborer  is  the  slave  of  the  capitalist,  that  he  is 
oppressed  and  down-trodden,  that  he  is  kept  in  a 


POLITICAL  ECONOMY  AND  CHRISTIANITY 

condition  of  hopeless  serfdom.  Yes,  it  must  be  ad- 
mitted that  he  is  only  too  often  a  slave — but  not  as 
many  seem  to  think  of  it.  He  is  only  too  often  a 
slave  to  his  own  ignorance  and  incapacity.  And 
this,  too,  is  a  very  real  thing.  He  remains  a  slave, 
because  he  remains  unconscious  of  things  which 
might  stimulate  him  to  better  work;  and  if  ready 
for  better  things,  he  does  not  know  what  to  do. 
He  does  not  know  about  savings  banks,  or  co- 
operative banks,  or  building  associations,  or  co- 
operative stores,  or  evening  schools  where  he  and 
his  children  may  be  taught  the  trades;  nor  does 
he  understand  why  he  should  need  these  things. 
Here  it  seems  to  me  the  vast  mass  of  the  ignorant 
and  unfortunate  have  a  claim  upon  the  wisdom, 
advice,  and  intelligent  sympathy  of  the  successful 
and  fortunate.  It  lays  the  responsibility  on  every 
one  of  us.  Better  than  the  gift  of  money  is  the  per- 
sonal interest  and  assistance;  the  money  is  quickly 
given,  and  the  matter  is  off  the  mind;  but  the 
assistance  takes  time  and  wisdom.  In  short,  the 
solution  of  the  labor  problem  is  not  to  be  reached 
in  an  hour  or  a  year;  it  calls  on  us  for  the  exertion 
of  all  those  forces  which  have  been  operating  for 
centuries  to  civilize  and  improve  the  human  race; 
and  the  movement  of  persons  from  the  lower  into 


LATTER-DAY  PROBLEMS 

the  higher  classes,  which  will  give  higher  wages, 
must  be  accompanied  by  the  moral  sense  which 
will  govern  the  expenditure  of  the  higher  wages 
Not  merely  more  money  and  more  comfort  should 
we  ask  for  our  fellow-men,  but  more  character. 

It  may  be  supposed  that  in  what  I  have  said 
reference  was  had  only  to  men.  The  responsi- 
bility which  lies  on  us  to  aid  in  the  material  prog- 
ress of  women  is  even  greater;  because  the  avenues 
open  to  working  women  are  fewer  than  to  working 
men;  custom  and  competition  are  much  more  in- 
fluential in  lowering  the  wages  of  women.  To  help 
them  we  must  follow  the  same  path.  We  must 
lead  women  to  see  the  value  of  saving.  But  this 
is  not  all.  Are  we  doing  all  we  might  to  establish 
free  schools  where  unskilled  women,  thrown  on 
their  own  resources,  can  learn  to  become  really 
good  cooks  and  housemaids?  Are  free  schools  as 
plentiful  as  they  might  be,  where  women  can  be 
trained  as  type-setters,  telegraph  operators,  type- 
writers, nurses,  wood-carvers,  decorators,  or  archi- 
tects? There  is  certainly  no  limit  to  the  practical 
work  to  be  done  to  make  ignorance  less  helpless, 
and  incapacity  less  discouraging. 


152 


POLITICAL  ECONOMY  AND  CHRISTIANITY 

vm 

Therefore,  when  some  persons  proclaim  that  the 
"labor  movement"  is  a  crusade  against  oppression, 
and  for  the  emancipation  of  the  workingman,  one 
scarcely  knows  what  they  mean.  Just  so  long  as 
men  remain  imperfect  and  human,  there  will  be 
found  the  bad  as  well  as  the  good.  There  is  no 
recipe  for  the  extinction  of  evil  that  we  know  of, 
which  lies  in  the  hands  of  society.  Some  persons 
represent  the  existing  evils  of  the  laborer's  lot  as 
due  to  some  artificial  constraint.  They  speak  as 
if  low  wages  are  paid  because  employers  are  op- 
pressors; they  overlook  the  grounds  for  differences 
of  wages  arising  from  differing  capacities  and  from 
overcrowding;  they  propose  to  alter  the  laws  of 
the  United  States,  or  cause  a  social  revolution,  or 
regenerate  society  in  the  twinkling  of  an  eye. 

If  there  is  any  one  thing  more  important  than 
another  to  aid  men  in  rising  to  a  higher  level  of 
comfort,  and  one  which  to  my  mind  is  funda- 
mental, that  thing  is,  as  I  have  said,  the  growth  of 
individual  character.  It  depends  on  motives 
which  have  their  results  in  individual  conduct;  it 
is  something  which  no  one  else  can  do  for  another. 
It  is  the  growth  of  self-help.  That  which  a  man 

153 


LATTER-DAY  PROBLEMS 

accomplishes  of  and  by  himself  is  worth  not 
merely  what  that  single  result  appears  to  be,  but 
the  power  of  accomplishment,  which  is  learned  by 
the  doer.  To  save  a  sum  of  money  is  not  all  that 
is  valuable;  the  new  man  that  rises  out  of  the 
process  of  that  saving  is  different  from  the  old 
spendthrift.  By  doing  he  grew;  and  the  second 
sum  is  far  easier  to  save  than  the  first.  In  the 
struggle  for  industrial  progress,  almost  everything 
hangs  on  self-help  and  individual  exertion.  Char- 
acter must  be  made  from  within.  If  this  be  true, 
what  must  we  think  of  those  doctrines  which  are 
sometimes  taught  in  high  places,  and  which  assure 
the  workingman  that  he  is  a  victim  of  error  and  in- 
justice, down-trodden  and  oppressed  by  a  vicious 
social  system,  and  that  the  State  shall  undertake 
his  release.  An  act  of  Congress  cannot  make 
character  or  efficiency.  But  so  long  as  man  remains 
what  he  is,  he  must  not  be  enervated  in  self-help 
and  personal  energy  by  any  illusive  hopes  held  out 
to  him  from  outside.  Dependence  on  the  State, 
and  individual  self-help — the  one  is  damaging  to 
progress,  the  other  lies  at  the  root  of  all  civil,  in- 
dustrial, and  religious  advance  in  any  land. 


154 


CHAPTER  VI 
LARGE  FORTUNES 


THE  hostility  to  large  fortunes  does  not  di- 
minish with  time  and  events.  The  violent 
denunciations  of  the  discontented  classes,  or  of 
the  more  extreme  socialists,  find  an  echo  in  the 
ranks  of  the  more  conservative  groups.  Into 
these  expressions,  evidently  based  on  strong  con- 
victions, has  entered  the  sting  arising  from  a  pas- 
sionate sense  of  wrong:  that  these  enormous 
accumulations  are  possible  only  at  the  expense  of 
the  poor;  and  that  women  and  children  go  cold 
and  hungry  in  order  that  others  may  go  warmly 
clad  and  live  luxuriously.  In  this  point  of  view 
there  is  a  hopelessness  which  serves  as  the  incen- 
tive to  brute  force,  to  wild  assaults  upon  the  bul- 
warks of  property  and  institutions.  What  are  we 
coming  to?  Are  the  times  out  of  joint?  Cer- 
tainly we  are  forced  to  face  the  facts  as  found  in 
the  thinking  of  great  numbers  of  people. 


LATTER-DAY  PROBLEMS 

To  say  that  a  man  is  a  multi-millionaire  is  to 
many  equivalent  to  saying  that  he  is  an  enemy  of 
society,  reaping  where  he  has  not  sown,  and  pro- 
tecting himself  in  his  vast  possessions  only  by  the 
corrupt  control  of  municipal  councils,  legislatures, 
and  even  the  highest  courts.  It  is  this  state  of 
mind  which  leads  some  intelligent  writers  to  hint 
of  another  French  Revolution,  and  of  prison  bars 
for  the  financial  kings.  Yet,  as  we  look  back  a 
century,  there  was  not,  at  least  in  the  United  States, 
any  such  antagonism  between  rich  and  poor. 
Perhaps  the  contrasts  between  the  richest  and  the 
poorest  were  far  less  marked  then  than  now,  and 
the  causes  of  dissatisfaction  due  to  impotent 
rivalry  were  more  generally  absent.  In  those 
earlier  days,  obviously,  the  total  wealth  of  the 
community  in  all  forms  was  very  small  in  com- 
parison with  its  diffusion  to-day. 

In  Parkman's  account  of  La  Salle's  marvellous 
winter  journey  from  Fort  Crevecceur,  on  the  Illi- 
nois, to  Fort  Frontenac,  at  the  eastern  end  of  Lake 
Ontario,  we  get  a  vivid  picture  of  a  region  now 
covered  by  a  busy,  struggling,  commercial  com- 
munity. Then  "the  nights  were  cold,  but  the 
sun  was  warm  at  noon,  and  the  half-thawed 
prairie  was  one  vast  tract  of  mud,  water,  and  dis- 

156 


LARGE  FORTUNES 

colored,  half -liquid  snow."  Often  without  food, 
watching  by  night  against  Indians,  and  marching 
by  day,  loaded  with  baggage;  "sometimes  push- 
ing through  thickets,  sometimes  climbing  rocks 
covered  with  ice  and  snow,  sometimes  wading 
whole  days  through  marshes  where  the  water  was 
waist-deep,"  La  Salle  spent  sixty-five  weary  days 
in  this  thousand-mile  journey  to  Fort  Frontenac. 
How  far  in  the  past  all  that  is  now!  Over  against 
the  picture  of  La  Salle  place  another  of  a  modern 
journey  in  a  warm,  luxurious  Pullman  car,  which 
travels  over  the  same  distance  within  a  single 
day.  The  contrast  is  great;  but  what  has  hap- 
pened on  this  "half-thawed  prairie"  since  La 
Salle  passed  by?  What  are  the  forces  that  have 
changed  the  world  of  La  Salle  into  the  rich,  bust- 
ling world  of  to-day?  In  his  time  there  were  in 
this  region  numbers  of  human  beings,  the  same 
soil,  the  same  climate,  the  same  rivers  and  lakes 
as  now.  Why  should  there  not  have  been  then 
the  same  vast  wealth  which  we  see  about  us  now, 
—great  canons  of  skyscrapers,  miles  of  factories, 
scores  of  converging  railways,  and  millions  of 
shipping  tonnage? 

Of  the  two  chief  forces  at  work  to  produce  this 
miraculous  transformation,  evidently  one  is  the 

157 


LATTER-DAY  PROBLEMS 

power  to  grasp  an  ideal,  or  future  gain,  so  dis- 
tinctly that  present  action,  or  indulgence,  is  directly 
controlled  thereby.  This  quality  of  human  beings 
is  the  first  and  most  fundamental  characteristic 
of  civilization.  It  is  the  absence  of  it  which  forms 
the  Mexican,  the  negro,  or  the  inefficient  savage. 
So  improvident  were  the  Paraguay  Indians,  so 
Mr.  Rae  tells  us,  that  they  cut  up  their  ploughing 
oxen  for  supper.  It  is  the  presence  of  it  which 
makes  possible  the  docks,  bridges,  steamships, 
and  irrigation  schemes,  all  of  the  returns  from 
which  will  be  received  only  many  decades  hence. 
Moreover,  it  is  the  quality  which  causes  saving 
— the  very  reason  for  the  existence  of  capital. 
The  willingness  to  forego  consumption  which  pro- 
vides a  present  indulgence  in  order  to  gain  some 
future  object  is  only  a  description  of  the  process 
by  which  capital  comes  into  being. 

This  physical  world,  on  which  the  human  mind 
can  have  its  play,  is  as  interesting  in  its  capa- 
bilities as  a  conjuror's  hat;  almost  anything  can 
be  got  out  of  it,  almost  everything  depends 
upon  what  we  ourselves  are,  upon  our  skill  in 
handling  nature.  In  the  infancy  of  civilization, 
mankind,  with  but  crude,  unaided  effort,  could 
produce  only  a  little  more  than  subsistence.  This 

158 


LARGE  FORTUNES 

little  excess,  however,  could  be  saved,  put  into 
simple  implements  of  industry,  which  made 
labor  more  efficient,  again  made  possible  new 
savings,  more  implements,  and,  in  the  endless 
round  of  centuries,  the  final  accumulation  of 
travelling  cranes,  harvesters,  motors,  telephones, 
and  rapid  communication  by  steam  and  elec- 
tricity— in  brief,  all  the  marvellous  efficiency  of 
present  industry.  All  this  would  have  been  im- 
possible on  the  prairie  of  La  Salle  without  a 
people  capable  of  duly  estimating  the  future  over 
the  present. 

This  array  of  the  productive  forces  of  society 
shows  the  necessity  of  capital  to  the  present  out- 
put of  wealth  and  to  the  present  welfare  of  all 
classes.  If  men  had  not  been,  decade  after  decade, 
saving  and  storing  up  capital,  it  would  be  as  im- 
possible to  employ  the  great  mass  of  laborers  now 
existent  as  it  would  be  to  feed  an  army  in  the  field 
on  promises  instead  of  on  solid  rations.  Some 
overwise  persons  among  us  growl  ominously 
about  the  right  of  capital  to  exist  or  to  share  in 
the  results  of  production:  this  is  as  if,  forgetting 
the  necessity  of  air  for  human  existence,  we  should 
object  to  air  in  general  because  it  is  sometimes 
dirty  or  malodorous.  Capital,  it  is  true,  may  be 


LATTER-DAY  PROBLEMS 

unfairly  used  by  industrial  managers;  and  yet  it 
is  quite  as  necessary  to  the  life  of  industry  as  air 
is  to  the  human  body. 

Capital,  however,  is  only  one  of  the  means  by 
which  the  human  brain  has  shown  its  capacity  to 
enlarge  the  satisfactions  of  society.  Besides  the 
implement,  there  must  be  the  power  to  direct  the 
implement.  The  second  force  necessary  to  re- 
create the  "half-thawed  prairie"  of  La  Salle  is 
the  devising  and  organizing  mind  of  the  "Captain 
of  Industry,"  the  mind  competent  to  manage 
labor  as  well  as  capital,  and  to  direct  them  both 
in  successful  enterprises.  The  possibilities  of 
production  are  never  realized  without  this  direc- 
tion by  pre-eminent  managerial  ability.  Yet  to 
some  minds,  possibly,  this  proposition  does  not 
appear  as  axiomatic. 

Seemingly,  everything  will  go  on  satisfactorily 
when  we  have  present  all  the  essential  factors  of 
production:  (i)  boundless  natural  resources,  in 
fields,  mines,  and  waters;  (2)  accumulations  of 
capital,  as  just  described,  which  allow  us  to  dis- 
count the  future  in  long-lived  enterprises;  and  (3) 
abundant  human  labor.  Something,  however,  is 
still  lacking.  Leadership  is  as  essential  in  indus- 
try as  in  politics  or  anything  else.  Human  labor 

160 


LARGE  FORTUNES 

may  mean  nothing,  or  everything.  Therein  lies 
the  understanding  of  much  that  is  puzzling  in  our 
economic  problem.  Is  labor  all  of  a  kind?  Ob- 
viously not.  Taking  the  world  as  we  find  it — and 
not  as  we  may  see  it  in  dreams — as  there  are  all 
kinds  of  work  to  be  done  in  the  industrial  field,  so 
there  are  all  kinds  of  men  in  respect  of  intelligence, 
efficiency,  and  productive  capacity  to  perform 
these  tasks.  In  the  republic  of  work  there  is  no 
Declaration  of  Independence  which  pronounces 
"all  men  equal."  Before  the  law,  as  respects 
rights  and  liberty,  all  are,  of  course,  equal;  but 
in  the  practical  operations  of  industry  some  are 
privates,  some  are  captains,  and  some  are  great 
generals  and  geniuses.  As  an  army  needs  offi- 
cers, so  the  industrial  organization  needs  man- 
agers. In  fact,  whether  the  industrial  campaign 
ends  in  success  or  not,  for  high  or  low,  de- 
pends pre-eminently  upon  the  quality,  insight, 
and  guidance  of  the  leader  in  charge.  Good 
management  means  large  product;  poor  manage- 
ment means  ruin. 

The  human  element  in  production,  whether 
in  the  work  of  guidance  or  of  obedience,  va- 
ries as  widely  as  human  nature  and  capaci- 
ty. Tot  homines,  tot  capacitates.  For  services 

161 


LATTER-DAY  PROBLEMS 

to  production,  laborers  may  be  roughly  classified 
by  strata,  as  in  the  diagram  given  in  chapter  III,1 
the  unskilled  men  in  A,  the  slightly  skilled  in  B, 
the  highly  skilled  artisans  in  C  (such  as  the  loco- 
motive engineers),  the  highly  educated  profes- 
sional men  in  D  (such  as  civil  engineers,  electrical 
experts,  and  the  like),  and  finally  the  exceptionally 
capable  managers  in  E.  In  any  one  industry 
some  of  each  kind  are  required,  but  not  with  the 
same  intensity  of  demand;  nor  are  they  wanted 
in  the  same  relative  numbers  in  different  industries. 
The  unskilled  man  in  A  has  no  wide  choice  of 
occupations  that  he  can  enter;  he  can  do  only  the 
work  demanded  of  his  class.  And  yet,  as  com- 
pared with  the  demand  for  them,  the  number  of 
laborers  in  this  strata  is  enormously  large.  More- 
over, in  the  A  class  there  is  the  least  capacity  to 
set  the  future  gain  above  the  present  indulgence. 
Thus  we  find  increasing  numbers  in  the  very 
group  whose  activity  is  restricted  to  a  given  kind 
of  work.  Among  those  least  competent  to  add  to 
production,  there  is  the  greatest  supply  relatively 
to  the  demand  for  them.  Their  share  is  small, 
not  only  because  their  industrial  efficiency  is  small, 
but  because  the  supply  of  them  is  excessive. 

1  Page  77- 

102 


LARGE  FORTUNES 

As  we  go  up  in  the  scale  of  industrial  efficiency, 
we  find  the  numbers  in  the  strata  of  the  more 
highly  skilled  much  less,  while  the  intensity  of 
the  demand  for  them  increases.  Hence  wages 
increase  the  higher  we  go.  In  the  top  strata,  con- 
taining the  most  efficient  managers,  we  find  the 
highest  wages  paid  throughout  the  whole  indus- 
trial field.  When  a  blundering  or  incompetent 
manager  costs  a  company  millions  in  losses,  a 
fifty-thousand-dollar  man,  who  adds  millions  in 
gains,  is  a  cheap  laborer.  In  this  struggle  up  the 
scale  from  A  to  E  we  find  the  real  social  conflict. 
It  is  a  contest  between  different  kinds  of  laborers 
— a  contest  of  varying  grades  of  industrial  capacity 
with  each  other.  It  is  a  free-to-all  race,  in  which 
the  most  competent  win.  The  great  indus- 
trial manager,  being  the  most  highly  skilled 
laborer  obtains  enormous  wages  for  exceptional 
services  to  production.  This  exposition  gives  us, 
in  brief,  the  economic  reason  why,  in  a  coun- 
try 'of  phenomenal  resources  like  the  United 
States,  men  of  exceptional  industrial  ability  can 
acquire  exceptionally  large  fortunes  legitimately; 
although  it  does  not  imply  that  all  men  are 
honest  and  that  no  fortunes  have  been  made  in 
dishonest  ways. 


LATTER-DAY  PROBLEMS 

Such  an  outcome  is  not  confined  to  one  field  of 
activity.  Great  capacity  which  has  shown  its 
effects  in  literature,  art,  music,  oratory,  or  state- 
craft will  none  the  less  come  to  the  fore  in  industry. 
In  this  country,  where  our  resources  are  almost 
untouched,  and  where  chances  are  open  to  all, 
great  managerial  power  can  no  more  be  prevented 
from  accumulating  large  fortunes  than  great  ora- 
tory or  great  learning  can  be  prevented  from  win- 
ning success  and  fame.  It  is  as  silly  to  carp  at 
great  industrial  capacity  as  it  would  be  to  carp  at 
great  literary  ability.  Great  wealth,  like  high 
office,  is  power;  we  cannot  object  to  the  one  any 
more  than  to  the  other.  As  a  race,  we  have  been 
working,  in  the  domains  of  law  and  government, 
for  centuries  not  to  abolish  high  office,  but  to 
regulate  it  by  proper  checks  and  balances  so  that 
it  may  work  for  the  good  of  the  many;  and,  in  the 
domain  of  economics,  it  is  equally  our  task  not  to 
attack  large  fortunes  in  themselves,  but  intelli- 
gently and  without  hysterics  to  set  about  the  crea- 
tion of  checks  and  balances  by  which  great  power 
in  the  form  of  wealth  may  be  so  controlled  that  it 
will  do  no  injury  to  the  many. 

In  adjusting  our  actions  to  the  facts  in  connec- 
tion with  the  accumulation  of  vast  wealth,  we  must 

164 


LARGE  FORTUNES 

keep  one  other  point  clearly  in  mind.  In  the 
general  and  indiscriminate  condemnation  of  great 
gains  this  following  consideration  is  frequently 
overlooked.  Industrial  managers  could  not  them- 
selves legitimately  accumulate  large  fortunes,  un- 
less by  their  operations  they  had  in  some  way 
abridged  the  sacrifices  of  production,  or  given  the 
public  a  better  article  or  a  better  service,  or  one  at 
a  lower  cost,  or  had  in  one  way  or  another  created 
a  vast  new  wealth,  out  of  which  they  have  been 
able  to  take  only  a  part.  A  few  illustrations  of 
this  principle  may  not  be  amiss. 

In  south-eastern  Europe,  Baron  Hirsch  amassed 
a  princely  fortune  by  insight  into  the  means  of 
new  and  improved  transportation  for  the  region 
of  the  lower  Danube.  The  resources  of  inacces- 
sible districts  in  the  Balkan  States  were  as  if  they 
did  not  exist:  cut  off  from  markets,  there  was 
no  employment  of  capital,  and  laborers  lived  a 
pitifully  mean  existence.  With  the  vision  of 
a  prophet  this  man  of  exceptional  managerial 
power  wove  webs  of  railways  throughout  those 
districts  capable  of  improvement,  and  brought  a 
market  and  employment  to  these  men  in  skirts 
and  turbans  such  as  had  never  before  stimulated 
their  industry  or  rewarded  their  labor.  A  new 

165 


LATTER-DAY  PROBLEMS 

surplus  wealth  came  into  existence;  out  of  the 
carriage  of  the  new  goods  Baron  Hirsch  obtained 
a  profit  on  his  railways.  The  toll  he  took  from 
the  new  millions  made  up  a  large  reward  to  him, 
but  it  was  only  the  fraction  of  a  vastly  larger  gain 
which  he  gave  to  those  communities  by  his  judg- 
ment and  capacity.  And  it  may  be  added  here, 
by  way  of  parenthesis,  that  he  would  have  in- 
creased the  wealth  of  this  region  far  more  than  he 
did  if  he  had  not  been  hampered  at  every  turn  by 
the  ignorant  interference  of  governmental  control  of 
rates,  especially  in  connection  with  through  transit. 
Coming  nearer  home,  another  instance  can  be 
found  when  the  first  Vanderbilt,  at  a  time  when  his 
outlook  was  far  beyond  that  of  his  contemporaries, 
foresaw  the  possibilities  of  opening  up  the  empire 
between  the  Great  Lakes  and  the  Atlantic  sea- 
board. On  the  thin,  stony  soil  of  New  England 
farmers  were  growing  wheat  and  corn,  but  at  a 
high  cost  in  effort  and  outlay;  while  the  rich  loam 
of  the  prairies  from  Indiana  to  Dakota  was  as 
little  known  as  the  Soudan  of  to-day.  The  valley 
of  the  Genesee,  in  western  New  York — later 
known  as  a  fertile  wheat  region,  and  now  cele- 
brated for  its  dairy  products — was  then  scarcely 
touched  by  the  plough.  For  opening  up  the  un- 

166 


LARGE  FORTUNES 

counted  resources  of  this  splendid  region,  Mr. 
Vanderbilt  risked  all  the  capital  he  had,  or  all  he 
could  control,  in  a  scheme  to  connect  New  York 
with  Buffalo.  He  bought  short  railways  already 
built,  constructed  connecting  links,  until  the  line 
crept  up  the  Hudson  to  Albany,  thence  westward 
along  the  easy  grades  of  the  Mohawk,  past  the 
Genesee,  to  the  Great  Lakes.  What  was  the 
result?  He  made  possible  the  settlement  and 
cultivation  of  whole  States,  he  gave  an  outlet  to 
markets  for  the  products  of  field  and  mine,  not 
only  along  the  course  of  his  railway,  but  in  all  the 
territory  reached  by  the  Great  Lakes.  Immigrants 
and  capital  poured  in,  while  goods  moved  both 
in  and  out,  permitting  the  profitable  investment  of 
untold  millions  in  all  the  industries  of  this  vast  in- 
terior. And  the  day  laborer  in  New  England  could 
transport  his  sustenance  for  a  whole  year  from  the 
rich  prairies  to  his  place  of  work  for  the  price  of 
one  day's  toil.  If  Mr.  Vanderbilt  accumulated 
fifty  or  sixty  millions  of  dollars  by  this  great  labor- 
saving  machine,  it  was  possible  only  because  he 
had  enriched  the  country  a  thousandfold  more. 
The  penetration  which  saw  a  great  opportunity 
gave  him  a  profit  in  proportion  to  the  extent  of  the 
enterprise.  It  was  not  a  case  of  monopoly;  any 


LATTER-DAY  PROBLEMS 

one  else,  equally  capable,  would  have  been  free 
to  do  the  same  thing.  The  truth  is,  his  kind  of 
insight  and  ability  was  rare — and  it  remains  rare 
to-day. 

Without  multiplying  instances,  it  is  perfectly 
possible  to  see  that  these  captains  of  industry 
may  accumulate  millions,  not  only  without  rob- 
bing others,  but  in  the  process  of  benefiting  others, 
especially  those  who  are  in  search  of  employment. 
Men  of  this  character  serve  precisely  the  same 
function  as  the  inventors  of  labor-saving  devices. 
When  Howe  invented  the  sewing-machine,  he 
abridged  human  effort  in  obtaining  clothing.  He 
secured  a  fortune  out  of  the  new  surplus  of  wealth 
made  possible  by  his  addition  to  the  efficiency  of 
the  human  race  in  its  productive  efforts.  The 
same  is  true  of  the  invention  and  manufacture 
of  harvesters  and  agricultural  implements.  The 
farmer  voluntarily  chooses  the  machine  because 
it  lowers  the  cost  of  getting  the  wheat  into  his 
bags.  If  it  had  not  been  a  gain  to  the  farmer,  the 
machine  would  not  have  been  introduced.  The 
profits  made  by  makers  of  such  devices,  therefore, 
are  not  stolen  from  the  farmer. 

If  it  be  said  that  these  gains  are  not  made  at 
the  expense  of  the  consumer,  but  at  the  expense 

168 


LARGE  FORTUNES 

of  the  laborer,  it  must  be  recalled  that  in  this  free 
land  it  is  open  to  any  laborer  to  get  the  high  re- 
turns of  managerial  capacity,  if  he  can  prove  his 
competency;  and  he  need  not  continue  to  receive 
low  wages  if  he  can  increase  his  industrial  effi- 
ciency in  the  processes  of  production. 


It  is,  of  course,  perfectly  understood  how  un- 
popular such  exposition  as  this  which  has  been 
already  given  may  be.  Moreover,  it  is  likely  to 
be  said — even  though  there  is  not  a  word  of  truth 
in  it — that  these  utterances  have  been  influenced 
by  pressure  upon  academic  liberty.  In  spite  of 
the  evident  dangers  of  misrepresentation,  however, 
there  is  no  other  way  possible  than  to  put  forth 
the  truth  according  to  one's  convictions  and  in- 
vestigations. If  criticism  is  carping,  and  scant  of 
logic  and  impartiality,  its  day  will  not  be  long. 

While  one  must,  therefore,  set  forth  only  what 
appears  to  be  scientifically  sound,  and  that  which 
appears  to  be  true,  as  distinct  from  popular  prej- 
udice or  misconception  of  the  facts,  still,  no  one  can 
be  oblivious  to  other  sides  of  the  case  than  that 
presented  above.  Why  should  there  be  so  wide- 
spread a  conviction,  honestly  held,  that  the  rich 

169 


LATTER-DAY  PROBLEMS 

are  harpies  preying  upon  the  poor,  and  gaining 
large  fortunes  unrighteously?  Obviously,  in  re- 
plying to  such  a  question,  not  everything  involved 
in  it  can  be  here  treated ;  but  some  of  the  main  con- 
siderations may  be  touched  upon. 

In  the  first  place,  it  is  no  more  likely  to  be  true 
that  all  managers  are  good  and  just  than  that  all 
workmen  are  honest  and  faithful.  There  are, 
and  will  be,  good  and  bad  managers,  just  as  there 
are,  and  will  be,  good  and  bad  workmen.  The 
error  of  the  popular  prejudice  against  the  pos- 
sessors of  large  fortunes  consists  in  making  the 
line  between  the  good  and  the  bad  coincident 
with  the  line  between  the  successful  and  the  un- 
successful in  money-getting.  In  truth,  the  line 
between  the  good  and  the  bad  cuts  through  both 
classes.  It  is  as  foolish  to  suppose  that  all 
money-makers  are  wicked  as  to  suppose  that  all 
men  with  brown  eyes  are  wicked.  An  evil  man 
will  show  his  bad  qualities,  whether  rich  or  poor. 
If  a  manager  of  great  capacity  is  of  this  sort,  then 
when  he  comes  into  control  of  capital  he  may  un- 
scrupulously grind  his  workmen,  cheat  his  credi- 
tors, buy  franchises  by  bribing  city  councils,  cor- 
rupt legislatures — and  cynically  defy  the  out- 
raged public  opinion  of  the  community.  Such  a 

170 


LARGE  FORTUNES 

man  is  not  unknown  to  us.  He  is  to  honest  in- 
dustry what  the  grippe  is  to  sound  health — he 
weakens  the  whole  system.  By  unfair  methods, 
by  dishonesty,  by  bribery  and  corruption,  large 
fortunes,  just  as  high  office,  may  be  illegitimately 
accumulated.  A  man  may  thus  add  no  new 
wealth  to  the  community,  but  merely  transfer 
wrongly  to  himself  wealth  which  others  have  pro- 
duced. Because  of  such  gains,  however,  it  is  not 
a  mark  of  maturity  to  condemn  sweepingly  all 
gains.  We  must  discriminate;  and  we  must 
know  the  facts  before  we  pass  judgment. 

Discrimination,  also,  should  be  properly  exer- 
cised in  making  a  clear  distinction  between  the 
way  in  which  a  fortune  is  accumulated  and  the 
way  in  which  it  is  used  after  it  is  won.  The  one 
may  be  right,  the  other  may  be  wrong.  Great 
wealth  may  be  honestly  gained  by  adding  to  the 
efficiency  of  production;  and  then  an  unprin- 
cipled owner  of  this  new  wealth  may  put  the 
power  resident  therein  to  mean  or  vicious  uses. 
Many  of  us  can  recall  a  railway  magnate  of  un- 
savory reputation  who,  in  all  probability,  gained 
a  considerable  part  of  an  immense  fortune  quite 
legitimately  by  reason  of  his  remarkable  insight 
into  industrial  problems;  and  yet,  if  we  are  to 

171 


LATTER-DAY  PROBLEMS 

believe  the  evidence  of  the  press,  he  used  his  gains 
in  wrecking  railways — selling  the  stock  short, 
impoverishing  the  weaker  shareholders,  buying 
the  stock  for  a  song,  and  then  putting  up  the  price 
of  the  securities  again  by  restorative  management. 
Is  it  any  wonder,  therefore,  that  undiscriminating 
people  sweepingly  condemn  all  large  fortunes  as 
dangerous  to  the  commonweal?  Dishonorable 
use  of  wealth  is  probably  no  more  common  than 
dishonorable  conduct  in  public  office.  But,  while 
it  is  possible  for  large  fortunes  to  be  rightly  earned, 
no  one  wishes  to  defend  or  apologize  for  the  im- 
proper use  of  that  which  has  been  well  come  by. 

Best  of  all,  for  the  man  who  has  not  only  honor- 
ably won  his  wealth,  but  who  has  spent  it  honor- 
ably, we  have  good  ground  for  admiration  and 
high  acclaim.  When  a  certain  New  England 
youth  left  the  elm-shaded  streets  of  Danvers,  he 
was  poor  in  purse,  but  rich  in  high  purposes, 
kindly  sympathies,  and  an  untried  capacity  for 
accumulating  wealth.  He  has  been  dead  these 
many  years;  but  the  great  wealth  of  George  Pea- 
body  nourishes  the  literary  life  of  his  native  town 
with  books  and  libraries;  vast  accumulations  of 
scientific  material  relating  to  the  early  history  of 
this  continent,  placed  in  Cambridge  by  George 

172 


LARGE  FORTUNES 

Peabody's  munificence,  will  serve  thousands  of 
students  in  all  the  years  to  come;  and  year  after 
year,  to  the  present  day,  a  commission  of  the  best 
and  wisest  of  our  public  men  have  gathered  to  dis- 
tribute a  splendid  fund  devoted  by  this  rich  phi- 
lanthropist to  the  elevation  of  the  negro,  to  the 
growth  of  education  in  the  South,  and  to  the  se- 
curity of  our  institutions. 

While  such  lives  as  George  Peabody's  give  the 
lie  to  undiscriminating  condemnation  of  all  large 
fortunes,  yet  there  exists  a  condition  in  our  politi- 
cal development  which  may  justly  give  us  great 
concern.  Things  are  going  on  in  our  local  and 
national  councils  which  give  plausible  grounds 
to  the  agitators  who  speak  against  existing  insti- 
tutions with  curses  as  bitter  as  quinine.  To  buy 
the  easy  passage  of  legislation  from  a  "boss"  is  the 
common  method  of  business  men  who  look  for 
short  cuts  to  their  objective.  In  some  persons, 
who  control  legislative  votes,  resides  the  power  to 
blackmail  rich  corporations  by  rumors  of  exami- 
nation, to  furnish  favors,  and  to  exact  campaign 
contributions,  which  would  do  credit  to  a  Spanish 
governor  in  a  distant  colony.  Even  if  the  thing 
desired  is  something  quite  proper  and  necessary 
in  itself,  it  becomes  the  usual  thing,  to  save  time 


LATTER-DAY  PROBLEMS 

and  annoyance,  to  hand  a  purse  to  an  attorney  of 
dubious  standing  and  instruct  him  to  secure  the 
passage  of  the  ordinance  or  bill.  More  than  that, 
the  belief  has  become  wide-spread  that  the  national 
councils  contain  men  who  are  the  representatives 
of  private  financial  interests,  and  that  remedial 
legislation  for  the  benefit  of  the  general  consumer 
is  blocked  by  the  long  purses  of  the  rich  for  the 
protection  of  their  private  interests.  The  bribing 
morals  of  such  members  of  the  rich  element  among 
us  are  largely  responsible  for  the  corrupt  munic- 
ipal council  and  the  venal  legislature.  Correct 
the  bribing  morals  of  those  who  possess  the  means 
to  bribe,  and  there  would  be  "nothing  in  it"  for 
the  debased  councilman  or  legislator. 

If  we  have  no  moral  responsibility  in  the  use 
of  wealth,  then  we  shall  have  abuses  arising  from 
the  disposal  of  wealth,  just  as  from  the  disposal 
of  power  in  any  other  form.  Millionaire  wealth, 
I  repeat,  is  millionaire  power.  The  right  or 
wrong  of  it  is  not  in  the  wealth  or  power  itself, 
but  in  the  controlling  spirit  behind  this  wealth. 
It  is  not  the  knife  of  the  assassin  we  detest,  but 
the  assassin  himself  who  wields  the  knife.  If  we 
insist  on  venting  our  displeasure  on  the  existing 
system  of  distribution,  by  all  means  let  us  direct 

174 


LARGE  FORTUNES 

our  vituperation,  not  against  wealth,  but  against 
the  turpitude  which  makes  a  wrong  use  of  a  power 
that  has  endless  possibilities  for  good.  A  gun 
fired  against  a  brutal  foe  in  defence  of  family  and 
country  may  be  glorious;  but  the  same  gun  fired 
for  vanity  and  for  selfish  conquest  over  a  weak 
people  is  damnable. 

As  in  most  questions  which  are  complex,  we  need 
discrimination  and  knowledge  of  the  facts  before 
judgment  is  passed.  One  must  have  little  patience 
with  the  narrow-mindedness  which  energetically 
works  in  season  and  out  of  season  to  get  sweeping 
legislation  to  level  the  inequalities  of  wealth,  or  to 
prevent  the  existence  of  large  fortunes.  It  is  like 
establishing  ordinances  against  knives,  or  razors, 
because  some  one  may  make  bad  use  of  them. 
There  will  be  inequalities  of  wealth  just  as  long 
as  there  are  differing  industrial  capacities  in  men. 
It  would  be  as  futile  to  attempt  to  regulate  accu- 
mulations of  wealth  as  to  legislate  on  the  weather. 
The  extreme  bitterness  against  wealth,  although 
excited  by  the  abuses  of  large  fortunes,  is  to  some 
extent  made  up  of  envy.  It  is  like  the  "yawp"  of 
a  dog  running  alongside  an  express  train,  indig- 
nant that  it  cannot  run  as  fast  or  make  as  big  a 
noise  as  the  train. 

175 


LATTER-DAY  PROBLEMS 

Instead  of  destruction,  the  higher  way  always 
is  by  construction.  The  wrong  is  not  in  the  gun, 
but  in  the  man  who  wrongly  directs  the  gun. 
The  one  thing  that  we  can  all  do,  and  do  strenu- 
ously, is  to  work  altogether  for  a  higher  standard 
of  morals  and  character  in  the  person  who  controls 
the  power  of  wealth.  We  can  refuse  social  recog- 
nition, or  public  office,  and  the  esteem  of  his 
fellows,  to  the  debased  manager  of  power,  be  it 
power  in  the  form  of  wealth,  or  brains,  or  inherited 
prestige.  The  indictment  of  all  wealth  without 
discrimination  is  folly,  for  large  fortunes  may  be 
honorably  won  and  honorably  spent;  fortunes 
honorably  won  may  be  dishonorably  spent;  fort- 
unes dishonorably  won  may  be  honorably  spent; 
and  fortunes  may  be  dishonorably  won  and  dis- 
honorably spent.  Here  is  our  whole  subject  in 
a  nutshell. 


176 


CHAPTER  VII 
VALUATION  OF  RAILWAYS 


WHEN  boards  could  be  smoothed  only  by 
hand,  a  man  with  a  plane  might  finish, 
perhaps,  ten  boards  in  a  day.  As  soon  as  a  plan- 
ing-machine  was  invented,  a  man  with  such  a 
machine  might  finish,  perhaps,  500  in  a  day.  (i) 
If  the  inventor  owned  all  the  planing-machines, 
he  could  hire  them  out,  and  builders  would  pay 
him  a  return  something  between  the  cost  of 
smoothing  10  and  500  boards.  To  give  the  builder 
some  advantage  the  inventor  might  charge  for 
the  use  of  the  machine  the  cost  of  finishing  450 
boards;  thus  the  one  would  gain  40  over  the  old 
hand-system,  and  the  inventor  would  enjoy  a 
royalty  of  450.  The  latter,  if  the  price  of  finish- 
ing a  board  was  10  cents,  would  receive  $45  as 
rent  for  his  machine,  and  he  could  sell  it  at  a 
price  that  would  return  him  $45  a  day,  more  or 
less,  according  to  the  depreciation  of  the  machine. 

177 


LATTER-DAY  PROBLEMS 

That  is,  the  monopolized  machine  would  sell  at 
the  capitalized  value  of  its  earnings;  and  the  in- 
ventor could  retain  this  gain  only  because  he  had 
a  monopoly  over  the  machines  which  represented 
in  permanent  form  his  creative  and  managerial 
ability.  (2)  On  the  other  hand,  should  the  con- 
struction of  planing-machines  become  common 
property,  and  thus  be  obtained  by  any  one  at  the 
mere  expense  of  producing  them,  the  price  of  a 
machine  would  at  once  fall  to  the  sum  which 
would  cover  its  expenses  of  production.  Its  effi- 
ciency may  have  remained  as  great  as  ever,  but 
its  value,  when  freely  reproducible,  would  fall  to 
its  simple  cost  of  reproduction.  If  not  monopo- 
lized, this  price  under  ordinary  circumstances 
could  go  no  higher.  That  is,  supply  can  dominate 
utility  in  its  effect  on  price.  Thus  we  may  see 
that  a  valuation  based  on  a  capitalization  of  earn- 
ings is,  as  a  rule,  possible  only  under  more  or  less 
strict  monopoly  conditions. 

Such  a  method  of  valuation,  however,  has 
played  a  prominent  role  recently  in  the  purchase 
of  industrial  plants  by  combinations.  Mr.  Car- 
negie, for  instance,  created  during  many  years  of 
operation  a  steel  plant  at  Homestead.  When  the 
United  States  Steel  Corporation  was  forced  to  buy 

178 


VALUATION  OF  RAILWAYS 

him  out,  how  much  should  it  pay  for  the  plant? 
On  the  one  hand,  the  cost  of  reproducing  the  plant, 
its  machinery,  coke-supplies,  railways,  etc.,  might 
perhaps  be  $100,000,000.  That  sum  might  repre- 
sent the  actual  capital  invested.  Should  the  value 
of  a  plant  be  computed  as  equal  merely  to  the 
value  of  the  capital  put  into  it?  Certainly  not, 
unless,  as  in  our  former  illustration,  it  were  a 
freely  reproducible  article.  If  any  group  of  men 
on  the  street,  who  could  get  together  the  required 
capital,  could  build  and  conduct  a  mill  as  profit- 
ably as  Mr.  Carnegie's,  then  the  Homestead 
works  were  worth  in  the  market  only  the  cost  of 
reproduction.  A  higher  price  could  not  be  paid, 
because  a  similar  establishment  could  be  built  at 
once  at  the  price  of  construction.  On  the  other 
hand,  we  are  told  that  the  most  sagacious  business 
men  in  the  country  paid  Mr.  Carnegie  some 
$400,000,000,  or  even  more,  for  this  plant.  It  was 
also  shown  in  the  courts  that  the  earnings  in  some 
years  had  been  as  high  as  $40,000,000.  In  short, 
no  one  hesitated  to  fix  the  price  of  the  going  con- 
cern by  its  proven,  or  average,  earnings  in  a  period 
including  both  lean  and  fat  years.  A  capitaliza- 
tion of  earnings  was  the  method  adopted  for  ascer- 
taining the  selling  price  not  only  of  a  steel  plant, 

179 


LATTER-DAY  PROBLEMS 

but  of  countless  other  industrial  plants  in  the  days 
since  1897.  Why?  Because  Mr.  Carnegie's  mills 
were  not  freely  reproducible  articles.  They  were 
not  freely  reproducible,  because  similar  manage- 
rial ability  is  scarce.  Obviously,  their  earning 
power  was  due,  not  merely  to  the  actual  capital 
invested — for  capital  in  and  by  itself  does  not  pro- 
duce anything — but  to  the  energizing,  fertile,  de- 
vising, inventing,  directing,  and  crafty  mind  of  the 
manager  of  the  whole  institution.  His  organizing 
and  constructive  genius  formed  a  productive  ma- 
chine of  high  efficiency;  his  power  of  obtaining 
coke  and  ore;  his  knowledge  of  men  and  markets; 
the  men  of  inventive  genius,  like  William  Jones, 
whom  he  gathered  around  him;  his  insight  into 
politics  at  Harrisburg  and  Washington;  his  deal- 
ings with  transportation  companies — all  worked 
together  with  his  invested  capital  to  build  up  the 
annual  earnings.  In  the  price  paid  for  his  prop- 
erty was  a  large  sum  which  represented  the 
permanent  efficiency  of  the  machine  created  at 
Homestead.  It  was  a  case  of  a  natural  monopoly. 
It  was  open  to  other  men  to  do  the  same  thing; 
but  few  there  were  who  could  do  it  as  well.  A 
high  price,  therefore,  was  paid  for  a  natural  mon- 
opoly formed  by  a  creative  mind.  It  would  be 

180 


VALUATION  OF  RAILWAYS 

aside  from  the  point  to  pay  only  for  the  capital 
invested;  for  admittedly  capital  is  only  one  of 
the  factors  entering  into  the  production  of  things 
of  value. 

n 

The  question  as  to  what  is  an  equitable  basis 
of  valuation  has  been  discussed  in  connection 
with  other  than  industrial  plants.  Very  recently 
the  true  method  of  valuing  railways  has  been 
brought  forward,  not  only  as  a  means  of  control- 
ling rates  on  traffic  carried,  but  also  as  a  means 
of  regulating  the  amount  of  railway  securities 
issued,  and  to  afford  a  basis  of  taxation.  Two 
methods  of  valuation,  in  general,  have  been  pro- 
posed: (i)  a  commercial  valuation,  based  on 
earnings;  and  (2)  a  physical  valuation,  based  on 
an  inventory,  at  an  appraised  value  of  the  tangible 
property.  This,  in  effect,  is  but  an  application  of 
the  general  principles  previously  observed  in  re- 
gard to  planing-machines  and  industrial  plants. 
Thus  we  are  obliged  to  determine  the  sources  of  a 
railway's  earnings,  and  whether  it  is  a  monopoly 
or  a  freely  reproducible  article.  If  the  former, 
its  value  should  be  fixed  according  to  its  earnings; 
if  the  latter,  according  to  its  cost  of  production. 

181 


LATTER-DAY  PROBLEMS 

Is  a  railway,  in  truth,  capable  of  reproduction 
by  any  group  of  men  who  can  control  merely  the 
capital  needed  to  create  its  visible  property — its 
cuts,  fills,  bridges,  road-bed,  stations,  rolling- 
stock,  wharves,  and  terminals?  If  one  had  the 
funds,  could  one  make  another  Pennsylvania 
Railroad  just  like  it?  Clearly  not.  Why?  To 
parallel  it  would  not  accomplish  the  task.  In 
fact,  the  actual  going  concern  is  a  complex,  not 
merely  of  tangible  forms  of  capital,  but  of  capital 
guided  and  shaped  by  men  who  "bore  with  a 
large  auger,"  and  who  have  created  an  individual 
machine  specially  adapted  for  transportation  in 
the  particular  region  and  cities  which  it  serves. 
It  is  profitable  precisely  because  it  is  different  from 
other  roads  differently  circumstanced.  Each  rail- 
way has  problems  of  its  own;  and  if  each  is  now 
fairly  well  established,  it  is  because  it  has  had  the 
services  of  men  capable  of  the  highest  order  of 
constructive  managing  ability.  A  successfully  or- 
ganized railway  is  as  much  the  result  of  efficient 
management  as  a  successful  newspaper  or  maga- 
zine. A  definite  persona  has  come  into  being, 
capable  of  continuing  usefulness  under  experi- 
enced guidance.  Such  an  organization  is  as  little 
capable  of  being  freely  reproduced  as  anything 

182 


VALUATION  OF  RAILWAYS 

under  a  natural  monopoly — like  a  great  book  or  a 
work  of  art. 

Nevertheless,  in  the  generally  critical  attitude 
of  to-day  toward  railways,  caused  no  doubt  by 
conspicuous  cases  of  indefensible  "high  finance," 
there  has  sprung  up  in  several  States,  as  well  as 
at  Washington,  the  intention  to  make  a  physical 
valuation  of  railways,  in  order  to  prevent  over- 
capitalization and  unduly  high  rates.  Behind 
this  intention  there  is  a  very  definite  idea  that  the 
earnings  of  railways  are  attributable  in  the  main 
to  the  capital  invested,  plus  the  income  derived 
from  privileges  given  the  roads  by  the  public. 
That  is,  earnings  are  analyzed  as  due  (i)  to  cap- 
ital investment,  and  (2)  to  franchises,  and  that 
the  earnings  from  the  latter  should  be  in  some  way 
— by  lowered  rates,  or  otherwise — returned  to  the 
public  who  gave  the  privileges.  Then,  obviously, 
the  railways  should  be  allowed,  on  general  prin- 
ciples, to  receive  a  reasonable  income  on  only  the 
capital  actually  invested.  This  proposal  has  been 
strenuously  opposed  by  the  railways,  generally  on 
the  ground  that  a  commercial  valuation  based 
upon  earnings  is  the  only  correct  method  of  valua- 
tion. To  this  it  is  answered  that  no  one  denies 
the  validity  of  determining  the  selling  price  of  a 

183 


LATTER-DAY  PROBLEMS 

railway  by  capitalizing  its  earnings;  but  it  is 
claimed  that  the  real  point  at  issue  is  to  be  found 
in  ruling  out  a  certain  part  of  the  earnings,  and 
thus  forcing  a  reduction  of  the  capitalization.  In 
brief,  it  is  urged  that  all  earnings  due  to  franchises 
should  be  eliminated,  that  they  should  not  be 
capitalized  or  represented  by  securities,  and,  con- 
sequently, that  there  is  no  justice  in  the  claim  that 
rates  should  be  maintained  at  a  level  high  enough 
to  pay  fixed  charges  and  dividends  on  a  capitaliza- 
tion which  includes  that  based  on  franchise  earn- 
ings. The  plan  to  make  a  physical  valuation  of 
a  railway,  therefore,  is  only  a  means  to  an  end, 
and  a  means  for  separating  the  earnings  due  solely 
to  capital  from  the  earnings  due  to  franchise 
privileges.  The  real  question  at  issue,  then, 
hinges  on  the  nature  of  these  privileges,  how  far 
they  give  special  gains  to  the  railways,  and  the 
right  to  such  income. 

m 

In  this  country,  a  railway  is  an  instrument  of 
transportation  which  can  be  constructed  freely  by 
an  outlay  of  private  capital.  There  is  no  mo- 
nopoly in  the  sense  that  only  one  road  can  be  built 
between  two  initial  points,  like  New  York  and 

184 


VALUATION  OF  RAILWAYS 

Chicago.  Several  lines  may  compete  for  traffic 
originating  in  these  two  cities,  but  each  one  would 
diverge  in  order  to  gain  the  advantage  from  local 
traffic  between  different  parts  of  the  country  lying 
between  the  two  points.  A  parallel  road  is  a 
"freak."  Thus,  so  far  as  mere  construction  is 
concerned,  a  railway  is  not  a  monopoly.  Yet,  once 
constructed,  it  cannot  be  bodily  removed,  and  no 
other  road  is  exactly  similar  to  it  in  work  and  re- 
turns. By  virtue  of  its  location  it  is  what  it  is, 
and  different  from  any  other  line.  In  one  sense, 
it  cannot  be  competed  with  in  certain  services. 
In  that  respect  it  has  a  monopoly  situation  by 
virtue  of  having  been  first  placed  where  it  is, 
since  people  and  industries  gather  at  that  place 
because  the  railway  is  there.  But  in  the  sense 
that  the  price  it  receives  for  its  service  is  open  to 
competition  in  many  ways,  it  has  no  monopoly. 

Apart  from  a  quasi-monopolistic  position  into 
which  it  grows  with  the  passage  of  time,  a  grant 
of  a  charter  by  the  public  to  a  railway  creates 
thereby  a  quasi-public  institution.  The  power  to 
condemn  real  estate  for  right  of  way,  and  the  priv- 
ilege of  conducting  a  transportation  business, 
which  by  the  nature  of  a  railway  is  locally  more 
or  less  monopolistic,  carries  with  it  an  obligation 

185 


LATTER-DAY  PROBLEMS 

to  give  equal  treatment  to  all  shippers.  This  is 
the  reason  why  railways  are  justly  supervised,  so 
that  the  rights  of  all — shippers  as  well  as  share- 
holders— shall  be  respected.  And,  since  the  cap- 
ital for  building  a  line  is  provided  by  private  enter- 
prise, there  is  no  valid  reason  for  governmental 
regulation  except  to  interfere  when  the  rights  of 
some  persons  are  restricted.  To  this,  it  should 
be  added  that — even  though  it  is  a  quasi-monopoly 
and  a  quasi-public  institution — the  investment  of 
private  capital  in  a  railway,  of  necessity,  implies 
the  taking  of  all  the  risks  involved  in  the  building 
up  of  a  transportation  instrument.  These  risks 
are  serious  and  many:  the  wisdom  of  making  large 
investments  in  tunnels,  wharves,  and  terminals; 
assuming  the  initial  expense  for  possible  future 
traffic  in  new  territory,  or  in  competing  for  traffic 
in  old  territory;  planning  for  access  to  new  and 
even  foreign  markets;  the  stimulation  of  local 
industries;  keeping  up  with  inventions  and  the 
progress  of  the  age,  and  yet  accurately  deciding 
which  project  will  be  a  commerical  success;  con- 
struction of  competing  or  parallel  lines;  losses  by 
floods;  depression  of  business,  which  reduces  traf- 
fic; failure  of  crops;  and  meeting  losses  due  to 
unexpected  and  ignorant  legislative  action. 

186 


VALUATION  OF  RAILWAYS 

The  privilege  of  carrying  on  a  quasi-public 
business  of  transportation  for  profit  on  private 
capital  is  often  spoken  of  as  a  franchise.  Fran- 
chises are  regarded  as  including  "rights  of  way, 
privileges,  and  monopolies  of  location  and  opera- 
tion, which  have  been  conferred  by  public  grant."  * 
Now,  in  return  for  these  so-called  franchises, 
what  return  does  a  railway  make?  If  it  does  its 
obvious  duty,  it  provides  prompt  and  efficient 
transportation  service  at  reasonable  rates.2  If  it 
does  that,  it  does  what  the  community  expected 
to  get  in  return  for  the  privileges  granted  when  the 
charter  was  obtained.  So  far  as  the  efficiency  of 
the  railways  and  the  reasonableness  of  the  rates 
is  concerned,  it  is  generally  admitted  that,  on  the 
whole,  our  service  compares  favorably  with  that 
of  other  countries.  Almost  all  the  recent  irrita- 
tion as  to  railways  is  undoubtedly  due  to  the  be- 
lief that  discriminations  have  existed,  and  all  have 
not  been  treated  alike.  If  a  road  does  not  pro- 
vide efficient  service  at  a  reasonable  price,  the 
community  would  have  a  right  to  annul  the  charter, 

1 W.  Z.  Ripley,  "Railroad  Valuation,"  Political  Science  Quar- 
terly',  December,  1907. 

*  Whether  the  rates  should  be  related  only  to  capital  investment 
or  not,  as  a  means  of  determining  whether  they  are  reasonable  or 
not,  is  discussed  later  on. 

187 


LATTER-DAY  PROBLEMS 

and — provided  it  made  a  proper  adjustment  of 
existing  investments — give  it  to  some  one  else  who 
would. 

The  grant  of  privileges  to  a  railway  is  com- 
parable to  the  general  right  of  private  property  in 
land  granted  by  society  to  its  members.  Society 
does  this,  because  it  expects,  in  spite  of  minor  dis- 
advantages, to  gain  more  by  giving  men  rights  of 
private  property  than  it  would  by  not  doing  so. 
When  a  man  buys  land  for  a  farm,  he  expects  to 
enjoy  the  unearned  increment  arising  from  the 
growth  of  population  and  an  increased  demand 
for  his  products.  All  citizens  alike  have  that 
right  at  present.  The  proposal  to  take  away  this 
unearned  increment  from  the  land-owner  has 
never  been  given  serious  consideration,  both  be- 
cause of  difficulties  as  to  valuation,  and  because  it 
would  render  the  State  liable  for  losses  if  it  took 
away  gains.  Now,  how  does  this  general  attitude 
toward  private  property  apply  to  a  railway?  If 
it  is  expected  to  make  a  large  initial  outlay,  at  a 
risk  as  to  future  profit — and  not  all  railways  by 
any  means  are  financial  successes — shall  its  prop- 
erty be  deprived  of  those  gains  due  to  the  growth 
of  population  and  wealth  which  is  enjoyed  by  all 
other  owners  of  property?  What  is  there  in  the 

188 


VALUATION  OF  RAILWAYS 

nature  of  transportation  which  sets  it  apart  from 
other  industries  in  its  relation  to  property  rights? 
A  railway,  as  well  as  a  farmer,  invests  private 
capital  in  a  fixed  form  and  locality  in  order  to 
obtain  income.  So  far  as  either  of  these  does  not 
interfere  with  the  rights  of  others,  their  economic 
position  before  the  State  is  much  the  same.  The 
quasi-public  nature  of  a  railway  justifies  public 
regulation  to  insure  equal  treatment  for  all;  but 
it  is  also  true  that  if  a  farmer  trespasses  on  the 
public  roads,  or  keeps  a  nuisance,  he  would  like- 
wise be  subject  to  regulation.  Therefore,  keep- 
ing strictly  to  a  general  principle  of  justice,  is 
there  any  more  reason  for  taking  away  the  un- 
earned increment  from  a  railway  than  from  a 
farmer?  If  an  increase  of  numbers  and  wealth 
increases  the  \ncome,  and  so  the  value,  of  a  farmer's 
land,  would  it  be  just  to  make  an  inventory 
merely  of  the  capital  he  invested,  and  take  away 
from  him  all  his  gains  due  to  society  at  large? 
Beyond  proportional  taxation  on  an  increased 
valuation,  who  else  has  a  better  claim  to  the  un- 
earned increment?  And  this,  by  the  way,  says 
nothing  as  to  returns  due  to  the  farmer's  skill  and 
foresight.  In  truth,  are  not  millions  of  farmers 
to-day  moving  out  on  to  the  cheap  land  of  the 


LATTER-DAY  PROBLEMS 

West  and  South-west,  paying  low  prices  per  acre, 
solely  because  they  expect  to  enjoy  the  coming 
unearned  increment?  Is  this  proposal  to  take 
away  the  earnings  of  railways  due  to  franchises 
any  less  academic  than  the  whole  question  of  tax- 
ing out  of  existence  the  unearned  increment  from 
land?  If,  then,  it  is  an  impracticable  scheme  as 
regards  the  farmer  and  land-owners  in  general, 
why  should  it  be  enforced  upon  one  special  kind 
of  property  created  by  society  in  the  form  of  a 
railway  ? 

A  good  deal  of  the  hysterics  shown  in  connec- 
tion with  railways  seems  to  have  been  created  for 
effect  in  our  political  campaigns;  so  that,  discount- 
ing such  motives,  we  should  be  able  to  discuss  these 
matters  sanely.  So  far  as  they  affect  his  property, 
a  farmer  is  allowed  to  enjoy,  sell,  or  capitalize  the 
results  due  to  the  growth  of  the  country.  If  so, 
then  why  should  not  a  railway  have  an  equal 
right?  Yet  there  are  those  who  declare  that  the 
act  of  giving  a  charter  by  the  public  to  a  company 
to  build  a  railway  carries  with  it  the  exclusion  of 
all  claim  to  future  income  derived  from  the  growth 
of  the  country.  This  is  what  is  meant  by  saying 
that  earnings  from  franchises  should  be  elimi- 
nated in  arriving  at  the  true  basis  of  valuation  of 

190 


VALUATION  OF  RAILWAYS 

a  railway.1  Provided  that  a  railway  gives  prompt 
and  efficient  service,  at  reasonable  rates,  and  equal 
treatment  to  all,  it  has  made  the  returns  to  society 
that  were  expected  when  the  charter  was  granted ; 
and  for  the  rest  should  it  not  stand  on  the  same 
ground  as  other  property,  so  long  as  the  institu- 
tion of  private  property  constitutes  the  essential 
basis  of  our  economic  and  civil  existence  ?  When 
the  Pennsylvania  Railway  invests  $100,000,000  in 
tunnels  and  terminals  in  New  York,  it  takes  the 
same  risks  for  the  future — in  kind,  although  not 
in  degree — that  a  farmer  takes  when  he  builds  a 
large  new  barn.  Why  should  not  both  have  the 
unearned  increment? 

As  regards  the  growth  of  the  country,  more- 
over, it  is  well  known  that,  to  meet  the  new  de- 
mands for  traffic,  railways  had  to  be  practically 
rebuilt,  with  larger  and  very  expensive  terminals, 
heavier  rolling-stock,  longer  and  more  side-tracks, 

1  This  should  not  be  regarded  as  the  same  thing  as  letting  a 
piece  of  property  for  which  a  rental  is  paid.  In  a  municipality 
the  renting  of  the  space  in  the  streets  for  street  railways  is  to  be 
paid  for  by  the  renting  company  that  occupies  the  streets.  The 
streets  belong  to  the  municipality;  but  the  right  of  way  of  a 
railway  running  through  the  country  has  been  bought  from 
private  owners;  and  in  cases  of  condemnation,  even  then  the 
land  is  bought  from  private  owners,  although  the  price  is  legally 
adjusted. 


LATTER-DAY  PROBLEMS 

and  the  like.  In  short,  the  growth  of  the  country 
has,  of  necessity,  brought  about  an  enormous  in- 
crease of  the  capital  investment,  as  to  reasonable 
returns  on  which  there  is  no  dispute.  Now,  in 
general,  it  is  the  line  which  has  the  best  road-bed 
and  equipment  that  can  most  easily  obtain  the 
needed  capital  for  improvements,  thus  enabling  it 
to  reduce  grades  and  lower  rates  on  an  increasing 
density  of  traffic.  Thus  the  rates  happen  to  vary 
in  inverse  relation  to  the  valuation. 

rv 

Whether  we  have  in  mind  a  farm,  an  industry, 
or  a  railway,  there  is  another  source  of  earnings 
which  plays  a  very  important  part — one,  too, 
which  is  independent  of  franchises.  Managerial 
ability  is  often  the  chief  item  in  bringing  out  earn- 
ings from  any  kind  of  venture,  and  it  appears 
pre-eminently  in  the  earnings  of  railways.  There 
is  here  no  intention  of  overlooking  the  cheating 
and  unprincipled  operations  of  railway  manipu- 
lators. Their  work  stands  in  a  class  by  itself; 
just  as  highwaymen  are  to  be  put  in  a  class 
different  from  that  of  industrious  farmers.  The 
existence  of  sharks  in*  railway  operations  does  not 
argue  the  non-existence  of  the  entrepreneurs  who 

192 


VALUATION  OF  RAILWAYS 

are  far-sighted,  square,  skilful,  judicious,  and  care- 
ful of  their  responsibilities  to  the  public.  The  lat- 
ter are  not  to  be  overlooked  because  of  the  greater 
notoriety  gained  by  rascals  in  their  own  profession. 
In  a  railway,  as  in  a  great  industrial  plant,  the 
organizing  ability  of  a  successful  manager  has 
often  justly  built  up  a  continuing  efficiency  in  his 
system  which  goes  on  when  he  leaves  it;  he  has 
introduced  new  methods  and  shown  the  best  way  to 
others;  and  the  results  of  his  good  management 
continue  to  add  to  the  income  in  the  future  because 
they  have  been  worked  out  to  suit  the  needs  and 
convenience  of  the  public  served  by  that  particular 
railway.  If  this  efficiency  created  by  a  manager  in 
an  organization  is  a  permanent  addition  to  the  util- 
ity of  the  transportation  instrument,  it  is  a  regular 
source  of  increased  earnings — the  same,  in  effect,  as 
an  addition  to  the  sources  of  income  arising  from 
any  other  admitted  factor  in  production.  Since 
these  results  of  management  have  become  a  con- 
stituent part  of  the  whole  transportation  machine, 
it  is  as  much  to  be  regarded  as  a  source  of  earnings 
as  anything  else,  such  as  capital.  For  capital  in 
and  by  itself  is  as  inert  without  skilful  management 
as  labor  would  be  without  capital.  Therefore,  if 
good  management  is  a  source  of  earnings,  the  valu- 


LATTER-DAY  PROBLEMS 

ation  based  on  such  income  should  as  legitimately 
be  bought  and  sold,  either  in  the  form  of  securities 
or  otherwise,  as  any  machine — like  a  harvester — 
which  results  from  the  brain  of  an  inventor. 
Consequently,  we  are  obliged  to  realize  that  there 
enters  in  an  important  manner  into  the  earnings 
of  a  railway  skill  of  management — a  factor  separate 
from,  and  in  addition  to,  the  operation  of  fran- 
chises ;  and  the  returns  from  this  managerial  func- 
tion are  distinct  from  those  chargeable  either  to 
franchises  or  to  capital  pure  and  simple.  And  if 
it  be  said  that  the  earnings  of  a  railway  depend 
upon  "good-will,"  "established  connections  and 
contracts,"  does  it  mean  anything  more  than  that 
they  are  due  to  managerial  skill? 

That  other  things  than  tangible  property  and 
franchises  seriously  influence  the  earnings  and  the 
valuation  of  a  railway  may  be  seen  by  reference 
to  well-known  facts.  One  railway,  with  efficient 
management  and  far-sightedness,  gains  large  re- 
turns, puts  part  of  the  earnings  into  improvements, 
and  can  carry  an  increased  capitalization  with  ease. 
Another  railway,  with  poor  management,  has  low 
returns,  and  can  scarcely  carry  its  original  capitali- 
zation. If  both  started  out  with  the  same  invest- 
ment, in  course  of  time  the  one  will  have  a  higher 

194 


VALUATION  OF  RAILWAYS 

physical  valuation  due  to  improvements  than  the 
other;  and  yet  both  roads,  competing  at  the  same 
terminals,  are  obliged  to  charge  the  same  rates. 
The  failure  to  introduce  all  the  necessary  factors 
affecting  earnings  evidently  accounts  for  the  theory 
which  supposes  that,  after  having  subtracted  the 
earnings  of  tangible  property,  or  invested  capital, 
from  total  earnings,  the  result  is. assignable  solely 
to  franchises.  One  omission,  at  least,  is  the  earn- 
ings of  management.  How  important  they  are 
may  be  noticed  in  the  particular  instance  of  the 
Atchison,  Topeka  and  Santa  Fe  Railway.  Several 
times  it  had  become  bankrupt  and  gone  through 
reorganizations.  Finally,  the  plan  was  adopted 
of  securing  the  services  of  four  of  the  best  railway 
men  to  be  found  in  the  country.  It  is  now  a  fact 
well  known  to  the  investing  world  that  the  Santa  Fe 
system,  under  the  leadership  of  Mr.  E.  P.  Ripley 
and  his  associates,  has  so  increased  its  permanent 
earning  power  that  the  valuation  of  the  prop- 
erty has  been  increased  by  hundreds  of  millions  of 
dollars.  Nor  can  this  be  ascribed  either  to  fran- 
chises or  to  the  unaided  growth  of  the  country; 
those  causes  were  at  work  when  the  road  was  pay- 
ing little  income.  The  real  cause  of  the  change 
was  the  policy  of  the  management  in  first  putting 


LATTER-DAY  PROBLEMS 

the  line  in  good  physical  condition,  so  that  low 
rates  were  possible;  the  activity  of  the  officials 
in  building  up  industries  and  in  developing  the 
country  through  which  the  railway  passed;  and 
this  aided,  reflexively,  in  settling  up  new  territory. 
Then,  when  a  part  of  the  country  became  well 
occupied — as  in  Kansas — for  the  very  reason  that 
the  railway  was  rendering  prompt  and  efficient 
service  at  reasonable  rates,  all  kinds  of  industries 
ancillary  to  a  civilized  population  sprang  up  and 
increased  the  density  of  the  traffic.  If  transporta- 
tion had  been  confined  to  prairie  schooners,  such 
growth  would  have  been  impossible.  The  rail- 
way is  as  much  the  cause  of  the  growth  of  the 
country  as  the  growth  of  the  country  is  the  cause 
of  the  growth  of  traffic. 


In  the  proposal  to  make  a  valuation  of  railways 
for  the  purposes  of  preventing  over-capitalization, 
and  also  of  controlling  rates  so  that  dividends  can 
be  paid  only  on  invested  capital,  two  kinds  of 
valuation,  as  already  mentioned,  have  been  dis- 
cussed: (i)  a  commercial  valuation,  based  on 
earnings;  and  (2)  a  physical  valuation  based  on 
an  inventory  of  tangible  property. 

196 


VALUATION  OF  RAILWAYS 

In  respect  to  the  commercial  valuation,  made 
in  1904  by  the  Bureau  of  the  Census,1  net  earn- 
ings (gross  earnings  minus  operating  expenses) 
were  used  as  a  basis  of  capitalization.  The  rate 
of  capitalization  was  obtained  by  dividing  the 
corporate  net  income  by  the  aggregate  value 
of  corporate  securities.  The  commercial  valua- 
tion is  a  market  estimate  which  takes  into  con- 
sideration the  expectation  of  income  arising  from 
the  use  of  the  property  and  its  strategic  sig- 
nificance; the  growth  of  the  country;  restrict- 
ive legislation;  potential  competition  by  rail  and 
waterways,  and  investment  demand.  Since  net 
earnings  are  directly  dependent  on  rates,  and 
the  valuation  depends  on  net  earnings,  obvi- 
ously such  a  valuation  could  not  be  used  as  a 
means  of  deciding  upon  the  rates  charged.  The 
proposals  recently  put  forward  reject  commer- 
cial valuation  because  it  includes  sources  of 
earnings  from  franchises,  and  not  merely  those 
from  the  capital  invested  in  transportation.  That 
is,  this  method  of  valuation  is  rejected  because 
it  does  not  conform  to  the  assumption  that  a  rail- 
bulletin  21,  Department  of  Commerce  and  Labor,  "Com- 
mercial Valuation  of  Railway  Operating  Property  in  the  United 
States:  1904." 

197 


LATTER-DAY  PROBLEMS 

way  should  not  retain  earnings  derived  from 
so-called  franchises,  the  growth  of  the  country, 
and  the  like. 

On  the  other  hand,  a  physical  valuation  is  de- 
clared to  be  a  means  of  governing  the  rates  charged. 
Omitting  franchises,  the  value  of  each  form  of 
railway  property  is  estimated  according  to  its  cost 
and  its  length  of  life,  and  an  inventory  is  made  of 
the  tangible  railway  investment  in  real  estate, 
cuts,  fills,  bridges,  ferry-boats,  wharves,  terminals, 
stations,  rails,  ties,  poles,  rolling-stock,  and  the 
like.  Hence,  the  new  policy  which  seems  to  have 
been  supported  by  President  Roosevelt  proposes, 
if  we  understand  it  rightly,  to  exclude  all  factors 
in  creating  earnings  except  capital.  In  the  first 
place,  such  a  method  excludes  from  railway 
property  the  gains  from  the  growth  of  the  country. 
It  is  the  theory  of  Henry  George  applied  to  rail- 
ways only,  although  not  applied  to  other  owners 
of  property.  In  the  second  place,  it  excludes  the 
earnings  due  to  managerial  skill.  In  the  third 
place,  such  a  valuation  in  fact  seems  to  have  no 
direct  relation  to  rates,  for  the  very  good  reason 
that  the  capital  is  not  the  sole  source  of  earnings. 
Finally,  the  attempt  to  trace  the  value  of  an  article, 
like  a  railway,  solely  to  one  factor  in  production, 

198 


VALUATION  OF  RAILWAYS 

separate  from  others,  is  an  example  of  question- 
able economic  reasoning.  It  is  impossible  to 
separate  the  results  in  a  finished  product  due  to 
distinct  factors,  like  labor  or  capital,  which  are 
both  necessary  to  the  output.  In  a  coat  made 
jointly  by  a  man  and  a  sewing-machine,  it  is  im- 
possible to  draw  a  line  across  it  and  say  that  so 
much  was  due  to  the  man  and  so  much  to  the 
capital  invested  in  the  machine.  The  value  of  a 
finished  article  is  due  to  the  operation  of  all  the 
factors  necessary  to  production  working  together. 
This  gives  the  ground  for  claiming  that  a  car,  a 
locomotive,  or  a  piece  of  track  has  in  and  for  it- 
self little  or  no  value  in  isolation,  and  that  their 
value  arises  from  joint  use  in  a  complicated  carry- 
ing instrument. 

These  objections  make  clear  the  reason  why 
the  opponents  of  a  physical  valuation  are  able  to 
show  in  ordinary  railway  practice  such  evident 
independence  of  rates  from  such  a  valuation. 
For  instance,  it  is  well  known  that  the  rate  on 
wheat  from  Dakota  must  be  low  enough  to  cause 
it  to  move  to  the  central  market;  in  other  words, 
the  price  of  wheat  in  Liverpool  has  more  influence 
upon  the  rate  than  the  amount  of  the  capitaliza- 
tion. Moreover,  wherever  there  is  competition  of 

199 


LATTER-DAY  PROBLEMS 

goods  with  goods,  or  competition  of  carrying  com- 
panies by  rail  or  water  with  each  other,  the  physical 
valuation  has  no  effect  on  rates.  Quite  irrespec- 
tive of  capitalization,  the  railways  eagerly  compete 
for  traffic.  Indeed,  it  is  the  insolvent  roads  which 
offer  to  carry  freight  at  the  lowest  rates;  and  the 
well-managed  road  must  meet  this  cut-throat  com- 
petition without  regard  to  its  invested  capital. 
Without  doubt,  all  the  recent  exasperation  against 
discriminations  arises  from  the  bitterness  of  the 
struggle  to  get  traffic,  wholly  without  any  connec- 
tion between  the  physical  valuations  of  the  rival 
roads.  Consequently,  it  is  clear  why  Hon.  Mar- 
tin A.  Knapp,  Chairman  of  the  Interstate  Com- 
merce Commission,  testified  before  the  Industrial 
Commission  that  he  had  not  known  an  instance 
in  which  rates  seemed  much  to  depend  upon  the 
capitalization  of  a  road. 

The  physical  valuation  is  an  outcome  of  many 
elements  which  are  wholly  unconnected  with  high 
or  low  rates.  The  actual  capital  invested  to  ac- 
complish a  possible  haul  of  100  miles  varies  with 
the  conditions  of  nature,  or  with  the  soil  and  cli- 
mate of  the  environment.  The  existence  of  snow, 
ice,  mountains,  deep  rivers,  and  the  like,  might 
cause  an  expense  of  $100,000  a  mile,  as  compared 

200 


VALUATION  OF  RAILWAYS 

with  an  expense  to  produce  the  same  haul  in  a 
level  and  temperate  region  of  only  $15,000  a  mile. 
In  the  former  case  the  physical  valuation  would 
be  high,  while  in  the  latter  case  it  would  be  low; 
and  yet  the  former  might  not  begin  to  earn  as 
much  as  the  latter.  In  fact,  both  roads  would 
probably  charge  the  same  rates  if  in  a  competitive 
territory.  The  one  may  be  a  more  valuable  road 
than  the  other  because  of  the  density  of  traffic  and 
obtain  larger  earnings  quite  irrespective  of  its 
lower  physical  valuation.  Certainly,  there  are  so 
many  instances  in  which  the  physical  valuation 
can  have  no  relation  to  rates  that  it  can  hardly  be 
seriously  used  as  a  means  of  regulating  such  rates. 
The  conditions  which  work  upon  rates  are  many 
and  diverse,  such  as  activity  or  depression  of 
trade;  the  competition  of  goods  with  goods; 
the  competition  in  international  markets;  the 
probability  of  obtaining  future  traffic  by  opening 
up  new  districts;  the  rivalry  of  different  cities 
and  interests.  In  many  cases  the  rate  is  fixed  for 
the  railway  by  conditions  beyond  its  control  and 
which  it  has  no  option  but  to  accept.  For  example, 
lumber  from  the  Pacific  States  must  be  given  a 
rate  to  Chicago  low  enough  to  enable  it  to  com- 
pete with  lumber  from  near-by  States;  otherwise 

201 


LATTER-DAY  PROBLEMS 

the  traffic  would  not  be  moved.  This  is  one  case 
in  which  the  railway  can  charge  only  what  the 
traffic  will  bear. 

The  railway  opponents  of  a  physical  valuation 
are  able  to  point  out l  that  a  small  railroad  in 
Pennsylvania  earned  $25,000  in  1905,  but  in  1906, 
because  of  the  building  of  a  parallel  road,  it 
showed  a  loss  of  $10,000.  In  another  instance, 
the  Cincinnati,  Lebanon  and  Northern  Railway 
in  the  suburbs  of  Cincinnati  earned  nothing;  but 
after  being  sold  to  the  Pennsylvania  Company  it 
was  placed  on  a  dividend-paying  basis. 

As  regards  over-capitalization,  the  case  is 
closely  connected  with  that  of  rates  already  dis- 
cussed. Sometimes,  as  in  the  plundering  of  the 
Chicago  and  Alton,  it  is  believed  that  a  higher 
capitalization  will  be  a  reason  for  high  rates; 
but  this  is  seldom  the  case  in  practice.  The  over- 
capitalization of  railways  is  chiefly  a  matter  con- 
cerning the  railway  and  the  investor,  and  has 
little  to  do  with  rates.  Since  to  the  investor — 
and,  in  the  case  of  bankruptcy,  to  the  customer  of 
the  railway — it  is  a  danger  to  have  his  securities 
reduced  in  value  by  over-capitalization,  the  wrong 

*I.  L.  Lee,  "Railroad  Valuation,"  Bankers'  Magazine,  July, 
1907. 

202 


VALUATION  OF  RAILWAYS 

should  be  avoided  by  more  direct  and  efficient 
means  than  by  a  resort  to  a  dubious  remedy  like 
physical  valuation.  Such  a  policy  stands  out  in 
bold  contrast  with  that  of  Governor  Hughes,  who 
has  met  the  evil  of  over-capitalization  in  the  State 
of  New  York  by  requiring  the  issue  of  new  se- 
curities to  be  approved  by  a  Board  of  Public 
Utilities.  This  is  a  more  rational  and  practicable 
method  than  forbidding  the  issue  of  securities  on 
the  ground  of  a  physical  valuation. 

The  relation  of  the  question  of  valuation  of  rail- 
ways to  taxation  is  a  separate  question  into  which 
we  need  not  enter  here.  Everything  depends 
upon  the  laws  of  the  separate  States.  If  they  tax 
all  property  upon  the  basis  of  the  market  value  of 
its  tangible  forms,  then  railways  should  be  taxed 
upon  the  same  appraisal.  On  the  other  hand, 
unless  other  going  concerns  are  taxed  upon  a 
valuation  based  upon  earnings,  railways  should 
not  be.  Equality  of  treatment  is  the  only  rule. 

In  conclusion,  we  may  recall  that  a  freely  re- 
producible article,  like  a  hammer  or  a  plane, 
would  have  its  value  limited  by  its  expense  of 
reproduction.  Obviously,  a  railway  in  a  certain 
place  is  not  freely  reproducible  by  other  persons 
than  the  owners,  and  hence  its  value  could  not 

203 


LATTER-DAY  PROBLEMS 

properly  be  based  on  its  mere  cost  of  reproduction. 
But  we  also  saw  that  a  monopolized  plant,  prac- 
tically incapable  of  reproduction  as  it  stands, 
would  have  its  value  determined  by  its  earnings. 
To  the  extent  that  a  railway  is  a  monopoly,  its 
commercial  valuation  will  be  based  on  its  earn- 
ings. But  a  physical  valuation  overlooks  sources 
of  earnings  properly  belonging  to  a  transportation 
company. 


204 


CHAPTER  VIII 
WOMEN  AND  WEALTH 


/TpHERE  have  been  many  analysts  of  the 
J.  American  woman  as  a  type — a  type  which 
must  be  difficult  to  express,  seeing  that  our 
country  has  within  its  wide  boundaries  many  dif- 
fering environments,  and  seeing  that  each  woman 
differs  in  nature  from  every  other.  Fiction,  how- 
ever, will  continue  to  present  feminine  character- 
istics as  character  so  long  as  human  nature 
enjoys  the  portrayal  of  its  own  singular  or  dra- 
matic performances.  But  the  study  of  woman- 
kind in  our  country,  as  influenced  by  the  extraor- 
dinary changes  in  our  economic  conditions,  and 
reflexively  as  herself  influencing  the  economic  sit- 
uation, is  a  matter  which  lies  outside  the  realm 
of  fiction,  no  matter  how  realistic,  and  has  a 
bearing  of  no  mean  importance  on  the  facts  of 
our  every-day  life.  It  is  a  task  requiring  great 
temerity  to  undertake,  no  doubt,  and  one  in 

205 


LATTER-DAY  PROBLEMS 

which  the  opportunities  for  going  astray  are  laby- 
rinthine. Why  speak  of  women,  for  instance,  as 
forming  an  economic  factor  separate  from  men? 
This  certainly  is  dangerous  ground;  and  it  is 
likely  to  call  out  the  suggestion  that  the  observa- 
tions made  of  woman  are  equally  true  of  man. 
Perhaps  this  is  a  caution  which  points  to  a  truth; 
but  nous  verrons.  More  than  this,  an  essay  on 
American  women  might  be  said  to  be  as  definite 
as  an  essay  on  trees.  American  women  are  no 
more  alike  than  trees;  they  differ  as  much  as  the 
persimmon  differs  from  the  peach  tree.  There- 
fore we  shall  not  venture  on  the  difficult  task  of 
generalization  about  American  women  as  a  whole; 
and  we  hope  to  file  a  caveat  here  and  now  that 
great  and  obvious  exceptions  must  always  exist 
even  for  every  limited  formulation  that  we  may 
venture  to  make.  However,  if  some  general 
tendencies  may  be  made  out — which  hi  the  very 
nature  of  human  beings  cannot  be  all-inclusive — 
we  shall  be  satisfied. 

Large  and  serious  changes  affecting  the  whole 
community  often  go  unnoticed  by  the  most  of 
us  precisely  because  of  their  general  and  wide- 
reaching  character.  A  change  so  large  that  it 
carries  with  it  the  surrounding  details  of  human 

206 


WOMEN  AND  WEALTH 

intercourse  does  not  provoke  comparisons.  A 
gradual  change  of  climate  which  leaves  hills, 
streams,  forests,  fields,  and  homes  in  the  same 
old  relationship  is  not  easy  to  define.  So  a  change 
in  the  relations  of  women  to  American  life,  which 
brings  a  whole  generation  under  the  same  new 
influences,  leaves  each  member  of  the  group 
under  the  same  general  impressions  relatively  to 
each  other,  and  a  new  community  existence  moves 
on  without  much  realization  of  its  newness. 
Homogeneity  in  the  new  crystallization  suggests 
no  strangeness  such  as  might  be  called  forth  by 
a  comparison  between  a  new  and  an  old  crystalli- 
zation. That  a  new  crystallization,  however,  is 
going  on  in  our  life  under  the  pressure  of  great 
economic  forces  seems  to  be  beyond  question; 
and  the  part  hi  it  played  by  the  women  of  the 
United  States  certainly  offers  in  itself  an  inter- 
esting study. 

Without  doubt,  many  women  of  America  are 
at  the  present  day  being  put  to  one  of  the  great- 
est tests  of  fibre  and  character  which  they  can  ever 
undergo — and  one  under  which  they  are  not  ap- 
pearing to  advantage.  A  deterioration  in  influ- 
ence and  quality  is  coming  to  change  the  very 
elemental  functions  of  a  large  class  of  women  in 

207 


LATTER-DAY  PROBLEMS 

our  institutional  life.  Is  this  a  temporary  mani- 
festation, arising  from  lightness  of  mind,  out  of 
which  a  sound  inner  strength  will  soon  bring  a 
better  outlook;  or  is  this  deterioration  only  the 
beginning  of  a  long  and  inevi table  decline?  Our 
men  have  always  been  distinguished  by  their 
good-natured,  tolerant,  indulgent  appreciation  of 
women.  In  addition,  this  great  commonwealth 
has  been  creating  new  wealth  in  a  way  unknown 
in  any  other  country  on  the  globe.  As  a  conse- 
quence, it  will  be  worth  while  to  focus  attention 
on  this  trial  which  many  American  women  are 
to-day  undergoing. 


The  economic  characteristics  of  American  life 
in  the  past  generation — perhaps  before  the  eigh- 
ties— was  the  general  absence  of  great  riches  and 
the  existence  throughout  the  country  on  the  whole 
of  a  comparatively  simple  standard  of  living. 
Even  the  rich  of  that  time  made  no  great  show  of 
superior  resources;  and  the  gap  between  them 
and  the  so-called  working  classes  was  far  less  than 
it  is  now,  not  only  as  concerns  the  actual  expendi- 
ture, but  also  as  concerns  the  standards  thought 
necessary  to  respectable  social  standing.  There 

208 


WOMEN  AND  WEALTH 

was  no  general  extravagance  in  houses,  furniture, 
clothes,  ornaments,  equipages.  There  was  no 
such  general  diffusion  of  wealth  as  to  create  a 
leisure  class  of  any  noticeable  extent.  It  was  at 
once  usual  and  expected  that  men  should  be  busy 
in  some  occupation,  no  matter  how  old  or  repu- 
table their  families;  and  with  the  great  body  of 
the  people  necessity  was  the  inevitable  spur  to 
work  of  all  kinds,  agricultural  and  industrial. 
Work  was  general  and  therefore  respectable. 
There  were  few  fictitious  standards  of  compari- 
son set  by  a  superiority  due  to  degrees  of  riches. 
Scanty  incomes  demanded  a  careful  adjustment 
of  means  to  ends,  and  forethought  as  to  expendi- 
ture was  so  much  a  matter  of  course  as  to  be 
counted  on  as  an  element  in  fashioning  character 
and  social  standards. 

These  economic  conditions  were  reflected  in 
the  ideals  and  standards  of  the  women  of  that  day. 
In  women,  as  in  all  human  nature,  there  is  the  good 
and  the  bad;  but  the  environment  tends  either  to 
stimulate  or  to  lessen  the  good  and  the  bad.  In 
that  earlier  day,  the  mass  of  women  were  free 
from  the  disadvantages  of  being  rich.  Inequali- 
ties of  wealth  had  practically  no  influence  in 
causing  any  condescension  to  those  who  had  to 

209 


LATTER-DAY  PROBLEMS 

earn  a  living  by  work  of  any  kind.  Women  of 
the  best  social  standing  took  a  share  in  the  phys- 
ical work  of  their  households.  To  paint  a  little 
woodwork,  to  fashion  some  article  of  furniture, 
to  care  for  the  garden,  to  harness  a  horse,  to  study 
the  markets,  to  give  thought  to  economies,  or  to 
personally  share  in  the  care  of  the  house  were  the 
common  virtues  even  of  women  of  some  means. 
And  among  the  generality  of  women  a  consider- 
able part  of  the  domestic  labor  in  the  home  was 
performed  by  the  wife  or  daughter.  Among  the 
poorest  families  there  was  much  sodden  drudg- 
ery; but,  in  the  main,  work  had  a  healthy  effect 
on  the  mind  and  body  of  women — and  from  fami- 
lies of  this  sort  the  nation  has  been  recruited  in 
robust  energy,  in  enterprise,  and  in  intellectual 
vigor. 

m 

It  is  needless  to  say  that  a  change  has  come 
over  the  face  of  our  economic  life.  There  are,  of 
course,  vast  numbers  who  are  to-day  poor,  or  in 
very  moderate  circumstances,  but  it  is  known  of 
all  that  with  the  enormous  increase  in  wealth  has 
come  the  creation  of  a  very  large  leisure  class 
composed  of  the  rich  and  the  very  rich.  This  is 

210 


WOMEN  AND  WEALTH 

the  most  significant  fact  of  this  generation.  The 
miles  of  comfortable,  or  even  handsome,  houses 
in  every  large  city,  the  thousands  of  automobiles 
on  the  streets,  are  only  a  few  of  the  obvious  evi- 
dences of  the  wide  distribution  of  riches.  The 
effect  of  this  economic  phenomenon  upon  Ameri- 
can women  is  a  matter  of  the  highest  import,  a 
study  of  the  first  magnitude.  It  touches  the  very 
heart  of  our  social  life,  and  makes  for  good  or  for 
ill  on  a  great  scale  in  our  immediate  future.  This 
is  the  test,  as  has  been  said,  which  a  large  body 
of  American  women  are  undergoing — the  greatest 
test  to  which  human  nature  can  be  subjected — 
the  test  of  prosperity  and  riches.  How  are  they 
coming  out  of  it?  It  may,  therefore,  be  the 
bounden  duty  of  a  student  to  examine  this  ques- 
tion with  the  same  spirit  with  which  he  would 
approach  the  scientific  study  of  the  coddling 
moth  on  apple-trees.  To  be  sure,  he  may  not  ex- 
haust the  subject,  he  may  not  even  be  correct  in 
his  analysis,  but  at  least  he  may  call  attention 
to  it,  and  challenge  the  critical  intelligence  of 
those  who  may  differ  from  him. 

To  what  is  about  to  be  said  it  may  be  replied 
that  the  same  thing  can  be  affirmed  of  men;  that 
they,  also,  have  been  put  to  the  same  test.  The 

211 


LATTER-DAY  PROBLEMS 

relation  of  men  to  this  recent  economic  readjust- 
ment, however,  is  not  the  same  as  that  of  women; 
the  patent  disassociation  of  women  from  indus- 
try, in  the  main,  is  a  sufficient  basis  in  itself  for  a 
separate  study  of  the  economic  effects  of  a  great 
increase  of  wealth  upon  some  women.  Women 
have  had  more  to  do  with  the  spending  than  with 
the  producing  of  wealth.  Moreover,  I  am  one  of 
those  who  believe  that  women  differ  widely  from 
men — without  raising  any  foolish  questions  about 
superiority  or  inferiority — and  that  women  as 
women  exercise  in  their  own  way  a  powerful  in- 
fluence on  the  economic  and  ethical  ideals  of  soci- 
ety. For  scientific  purposes  the  classification  of 
women  by  themselves  is  based  on  sufficiently  dis- 
parate situation  and  characteristics  to  warrant 
such  an  attempt  as  is  suggested. 

IV 

We  may  now  proceed  to  outline  the  charac- 
teristics of  the  prevailing  types  of  well-to-do 
women  of  the  present  day,  as  contrasted  with 
those  which  were  briefly  set  forth  for  the  previous 
generation.  But  let  me  say  again  that  there  must 
be  many  exceptions  to  any  general  statements 
and  that  there  is  great  danger  in  sweeping  gen- 

212 


WOMEN  AND  WEALTH 

eralizations.  Nevertheless,  it  is  possible  that 
there  may  be  such  repetition  or  prevalence  of 
acts  as  to  form  groups  of  facts  capable  of  being 
classified  and  described — and  from  which  im- 
portant inferences  may  be  drawn. 

(i)  The  first  and  most  obvious  phenomenon  is 
one  which  has  appeared  again  and  again  in  past 
history — one,  too,  which  is  founded  deep  in  hu- 
man nature.  It  is  only  natural  that  it  should 
appear  now  in  a  democracy  just  as  we  are  emerg- 
ing from  a  stage  of  relative  poverty  to  that  of 
relative  affluence.  In  primitive  society,  as  well  as 
in  the  Middle  Ages,  as  soon  as  persons  got  power 
and  wealth  they  wished  distinction;  they  wished 
to  indicate  by  their  chateaux  and  palaces,  their 
dress,  tables,  manners,  and  retinue  of  servants,  a 
position  "superior  "to  that  of  others.  Indeed,  it  is 
a  commonplace  of  economics  that  a  large  range 
of  human  wants  arises  from  the  desire  to  make  a 
display  of  superiority.  Such  things  as  napkins, 
table  linen,  now  in  common  use,  were  originally 
devised  as  means  of  distinguishing  a  superior 
from  an  inferior  class.  This  general  method  is 
being  employed  to-day  in  our  country  among 
those  who  have  recently  accumulated  wealth. 
Our  so-called  "  smart "  society  differentiates  it- 

213 


LATTER-DAY  PROBLEMS 

self  from  others  largely  by  forms,  usages,  and  ex- 
penditures in  which  only  a  few  can  participate. 
Without  great  wealth  a  certain  sort  of  exclusive- 
ness  is  impossible;  hence,  sooner  or  later,  new 
wealth — even  if  the  vulgarity  of  its  first  possess- 
ors debars  them  for  a  time — gives  to  the  second 
or  third  generation  the  satisfaction  of  exclusive- 
ness  based  on  the  power  to  buy  what  others  can- 
not afford.  To  be  conspicuous,  even  to  do  au- 
dacious and  unconventional  things  in  order  to 
show  distinction,  is  no  uncommon  trick  of  those 
who  pose  as  superiors.  The  affectation  of  supe- 
riority by  those  who  have  little  intelligence  but 
great  eagerness  for  social  position  is  often  ac- 
cepted as  real  when  it  takes  the  form  of  critical 
condescension  to  those  about  them.  It  is  this 
claim  to  a  counterfeit  superiority  because  of  the 
possession  of  wealth  which  has  come  to  be  one  of 
the  commonest  characteristics  of  a  large  class  of 
American  women  of  to-day.  Without  titles  and 
manor-houses,  the  democratic  society  of  to-day 
is  weakly  repeating  the  history  of  earlier  ages, 
when  privileged  classes  assumed  the  marks  of 
distinction  based  on  power.  Then  it  was  often 
based  on  the  power  of  military  force,  the  law  that 
might  makes  right;  but  now  it  is  based  on  the 

214 


WOMEN  AND  WEALTH 

power  of  wealth,  the  law  that  riches  makes  su- 
periority. 

(2)  In  other  words,  there  has  come  about  an 
unfortunate  shifting  of  standards,  a  change  in 
relative  emphasis,  together  with  a  falling  off  in 
ethical  ideals.  The  common  passion  of  the  rich 
women — and  it  is  probably  equally  true  of  too 
many  of  those  who  are  not  rich — is  for  what  she 
thinks  to  be  social  position.  I  am  not  so  simple- 
minded  as  to  attempt  to  define  that  ignis  fatuus, 
"social  position."  There  is  the  height  from  which 
one  level  of  servants  looks  down  on  another;  there 
is  the  possibly  uncultured,  select  coterie  of  a 
country  village;  there  is  the  equally  uncultured 
and  often  uninteresting  rich  coterie  of  the  larger 
city.  No  matter  what  its  quality,  no  matter 
how  its  atoms  chanced  to  collect,  once  its  char- 
acteristic of  solidarity  and  exclusiveness  is  real- 
ized, then  the  light-headed,  and  especially  the 
merely  rich,  would  sacrifice  health,  ideals,  and 
even  ties  of  relationship  and  friendship  for  the 
bauble  which  to  their  minds  admits  them  to  the 
desired  circle  and  sets  them  apart  as  socially  su- 
perior to  others.  In  this  pitiful  social  climbing, 
in  this  devastating  social  rivalry,  in  which  cer- 
tain requirements  have  the  force  of  tyrannical 

215 


LATTER-DAY  PROBLEMS 

despotism,  and  in  which  character  dwindles  to 
unconscious  imitation  of  what  is  supposed  to  be 
athe  thing/'  the  quality  of  many  well-to-do 
women  is  very  plainly  deteriorating.  Among 
them  conduct,  courses  of  action,  personal  esti- 
mates are  not  based  on  conscious  reflection,  on 
tests  of  right  and  wrong,  on  a  judicial  balancing  of 
pros  and  cons,  but  almost  entirely  on  what  "others 
will  think/'  that  is,  on  the  tyranny  of  chance 
opinion  in  the  social  set  which  they  value  more 
than  their  own  souls.  How  many  mothers  of  this 
class  would  allow  young  girls  of  the  coming-out 
age  to  snub  an  immoral  young  man  who  was  a 
social  leader,  and  thus  cause  her  to  be  left  out  of 
the  usual  round  of  invitations? 

(3)  Not  infrequently  a  test  of  social  exclusive- 
ness  is  the  willingness  of  the  members  in  a  "set" 
to  be  wilfully  blind  to  immoral  performances. 
Indeed,  the  supposed  unwillingness  to  accept  the 
current  code  of  morals  in  the  set,  or  not  to  join 
in  with  it,  is  a  reason  for  exclusion.  To  speak  to 
outsiders  of  peccadilloes  which  are  common  prop- 
erty within  the  charmed  circle  is  high  treason  to 
the  laws  of  social  position.  Thus  new  codes  of 
ethics  for  women  are  ever  being  created,  based  not 
on  the  higher  experience  of  the  race,  but  on  the 

216 


WOMEN  AND  WEALTH 

chance  and  loose  ideas  of  self-indulgent  persons 
who  happen  to  be  for  the  tune  regarded  as  lead- 
ers of  society.  The  relative  emphasis  has  shifted. 
The  principles  of  a  hardy  people,  by  which  they 
have  risen  to  power  and  influence,  are  thus  ex- 
posed, through  the  weakness  of  some  of  its  women, 
to  inevitable  deterioration.  As  are  our  women,  so 
are  our  men.  Tell  me  the  ethical  standards  of 
our  mothers  and  daughters  and  I  will  tell  you 
in  the  main  the  ethical  standards  of  our  fathers 
and  sons. 

(4)  In  passing  from  the  old  order  to  the  new 
the  well-to-do  woman  of  to-day  has  come  to  re- 
gard work  as  demeaning.  Many  would  be  cha- 
grined to  be  caught  doing  any  physical  labor  in 
the  household,  which  their  mothers  before  them 
very  likely  did  as  a  matter  of  course.  Superiority 
is  now  supposed  to  be  evident  in  the  ability  to  hire 
the  largest  retinue  of  servants,  so  that  all  physical 
exertion  is  rendered  unnecessary  as  well  as  de- 
meaning— that  is,  if  it  is  rendered  because  of  econ- 
omy or  necessity.  Idleness  has  come  to  be  a 
mark  of  social  eminence.  Whether  a  woman  is 
properly  to  be  included  or  not  in  good  society 
is  almost  decided  by  the  fact  that  she  takes  her 
breakfast  and  spends  her  morning  in  bed.  To  say 

217 


LATTER-DAY  PROBLEMS 

that  work  has  become  demeaning,  however,  is  not 
to  say  that  fashionable  women  are  not  busy  or 
overoccupied.  It  depends  on  whether  the  par- 
ticular occupation  is  "the  thing."  She  must  not 
work  because  of  necessity;  she  may  walk  in  the 
country,  but  not  in  the  city  when  shopping.  Or, 
merely  to  be  audacious,  because  she  is  a  member 
of  a  privileged  coterie,  she  may  conspicuously  do 
a  task  of  the  working  class  to  prove  that  her  posi- 
tion is  impregnable.  She  may  fill  her  day  with 
attendance  on  committee  meetings  or  on  hospital 
boards;  but  it  often  depends  upon  who  else  is  on 
those  boards  or  committees.  She  would  not  wish 
to  have  her  name — that  is,  if  her  social  position 
is  not  yet  impregnable,  and  not  infrequently  when 
it  is — appear  on  a  board  on  which  there  were  "no- 
bodies." No  matter  what  the  merits  of  the  in- 
stitution, much  depends  on  whether  it  has  been 
taken  up  by  the  set. 

(5)  It  has  sometimes  been  said  that  American 
women  are  becoming  more  independent;  that 
the  opening  of  new  occupations  to  women  has 
given  them  more  opportunities  to  earn  income 
and  has  freed  them  from  the  necessity  of  mar- 
riage. There  is  no  doubt  much  truth  in  this  as 
regards  the  women  who  work  for  income  as  well 

218 


WOMEN  AND  WEALTH 

as  those  who  willingly  take  up  the  burdens  of 
household  tasks — and  who  may  be  said  to  form 
our  large  and  "sound  remnant"  and  the  future 
hope  of  society.  But  the  so-called  independence 
of  the  richer  women  has  its  roots,  to  all  appear- 
ances, in  selfishness.  She  is  independent  of  re- 
straint because  she  is  unwilling  to  do  anything 
onerous  or  disagreeable.  Freed  from  want,  freed 
from  exertion,  freed  from  anxiety  as  to  the  future, 
she  is  in  the  perilous  position  of  having  to  follow 
only  her  self-indulgences.  Her  parents,  who  have 
known  the  privations  of  an  earlier  time,  foolishly 
wish  their  daughter  to  have  everything  which 
money  can  buy.  Through  a  natural  but  unin- 
telligent fondness  there  has  been  created  an  en- 
vironment acting  to  weaken  positive  fibre  and  to 
develop  selfishness.  Except  in  a  strong  inherited 
helpfulness,  altruism  has  thus  a  poor  soil  in  which 
to  flourish.  In  her  self-centred  life  she  is  shut 
off  from  any  real  knowledge  of  the  great  world 
of  poverty  and  suffering  outside  her  ken.  It  is 
pathetic  to  think  of  how  many  women,  whose 
wealth  means  potential  usefulness,  spend  their 
time  and  all  their  thought  in  purely  selfish  ab- 
sorption in  the  work  of  their  dressmaker  and 
coiffeur.  They  become  hen-minded  and  inane 

219 


LATTER-DAY  PROBLEMS 

largely  because  their  lives  are  engrossingly  selfish. 
They  are  self-willed  and  seemingly  independent 
because  they  are  too  often  regardless  of  the  needs 
and  happiness  of  others. 

(6)  Idleness,  or  the  escape  from  doing  difficult 
or  unpleasant  things,  fails  to  develop  fibre  in  a 
grown  woman  as  well  as  it  does  in  a  child.  Free- 
dom from  disagreeable  or  enforced  tasks — to  be 
removed  as  soon  as  they  are  shown  to  be  disliked 
— produces  spoiled  children,  as  every  one  knows; 
but  it  does  not  seem  to  be  as  well  recognized  that 
a  continuation  of  this  process  in  later  years  pro- 
duces spoiled  grown-up  children.  So  far  has  the 
evil  of  new  wealth  influenced  those  who  have  not 
learned  how  to  use  it  that  self-indulgence  has  be- 
come a  marked  characteristic  of  the  well-to-do. 
Removed  from  the  necessity  of  self-control  as  a 
means  of  obtaining  an  income,  and  having  the 
means  of  gratifying  every  whim,  their  self-control 
no  longer  appears  except  so  far  as  it  is  necessary 
to  make  social  conquests  or  to  get  a  satisfaction 
for  personal  vanity.  Then  self-indulgence  leads 
to  the  inevitable  satiety  of  usual  satisfactions. 
Dress,  houses,  silver,  and  footmen  can  be  bought 
by  all  who  are  rich — and  cease  to  be  marks  of  ex- 
clusiveness  as  the  rich  increase  in  numbers.  Then 

220 


WOMEN  AND  WEALTH 

satiety  in  obvious  things  begins  to  prompt  a  hunt 
for  new  sensations — a  state  of  mind  which  ex- 
plains the  brief  career  of  a  social  favorite,  the 
taking  up  of  a  winter  sensation  and  its  early  and 
complete  oblivion,  the  appeal  to  the  social  palate 
of  things  having  the  tang  of  tainted  duck. 

(7)  In  many  cases  the  new  wealth  has  come 
without  the  necessary  accompaniment  of  a  pre- 
vious preparation  for  its  use.  There  are,  of  course, 
many  noble  women,  of  poor  origin  but  of  high 
character,  whom  no  new  riches  could  injure  or 
corrupt.  But,  in  examples  so  numerous  as  often 
to  set  the  standard,  women  with  raw,  unculti- 
vated minds,  unable  to  discriminate  between  the 
real  and  the  false,  not  able  to  know  an  impostor 
because  they  have  never  known  by  contact  the 
real  man  of  cultivation,  unable  to  control  vanity 
by  any  power  of  logic  or  analysis,  yet  swollen  with 
the  conceit  born  of  wealth,  have — even  when  not 
obviously  vulgar — developed  a  lack  of  perspec- 
tive which  forms  a  sad  indictment  of  their  early 
education.  Since  education  is  not  information 
or  learning,  but  a  point  of  view,  the  lack  of  edu- 
cation appears  to  be  perilously  general — if  we 
judge  from  much  of  the  social  outcome.  Cer- 
tainly, if  the  point  of  view  is  common  that  merit 

221 


LATTER-DAY  PROBLEMS 

is  to  be  measured  by  what  one  has  rather  than  by 
what  one  is,  much  of  women's  education  has  been 
wofully  imperfect.  But  in  this  day  of  transition 
in  all  education  it  is  too  easy  to  score  by  hitting 
the  insufficiencies  of  women's  education.  If  much 
of  our  education  for  men  is  bad,  theirs  is  worse. 
If  we  demand  on  the  one  hand  that  a  man's  edu- 
cation should  fit  him  for  the  actual  life  he  is  to 
lead,  why  should  not  the  same  demand  be  made 
on  the  other  hand  for  the  education  of  women? 
So  far,  a  great  amount  of  no  education — or  bad 
education — has  excited  in  certain  classes  of  women 
a  crowd  of  expectations  which  have  led  them  to 
regard  as  necessities  things  of  insubstantial  value; 
but  if  things  are  denied  them  which  are  wilfully 
demanded,  they  develop  a  hot  discontent.  The 
situation  thus  produced  is  one  which  concerns 
ideals.  To  be  truly  educated,  to  have  a  right  point 
of  view,  is  to  have  high  ideals.  Selfish,  self-in- 
dulgent lives  are  directly  traceable  to  low  ideals. 
It  is  an  economic  truism  that  if  we  change  the 
wants  of  a  people  we  change  the  whole  character 
of  the  production  which  supplies  those  wants. 
It  is  the  point  of  view  which  makes  the  difference 
between  the  civilization  and  industries  of  the 
Apaches  and  those  of  the  old  New  Englanders. 

222 


WOMEN  AND  WEALTH 

(8)  Were  the  desire  common  to  be  an  agreeable 
personality  rather  than  to  exult  in  what  one  has 
or  in  what  one  knows,  the  extravagance  of  the  day 
would  not  be  so  general  or  so  amazing.  The  ex- 
travagance of  many  American  women  is  a  fairly 
good  test  of  their  point  of  view,  of  their  ideals. 
Unfortunately,  it  too  often  represents,  not  merely 
the  satisfaction  of  the  beautiful,  but  vanity,  emu- 
lation, self-indulgence,  and  love  of  display.  In 
many  cases,  no  doubt,  it  represents  no  thought  at 
all,  but  only  a  mental  flabbiness  which  accepts,  as 
a  matter  of  course,  what  is  done  by  the  people 
around  them.  How  great  is  this  extravagance  is, 
perhaps,  scarcely  realized  in  a  community  where 
extravagance  is  so  nearly  universal,  and  where  the 
cost  of  living  is  so  generally  high,  as  in  this  coun- 
try. But,  undoubtedly,  much  of  the  situation  in- 
cluded under  the  term  "high  cost  of  living"  is  due 
to  the  unrestrained  desire  to  have  everything  that 
any  neighbor  or  acquaintance  has.  Many  women 
are  often  too  shallow  to  think  out  the  sources  from 
which  their  extravagances  must  be  supplied  or 
how  far  they  are  responsible  for  the  insane  pas- 
sion for  riches  which  now  corrupts  the  good  morals 
of  industry  and  the  state.  They  are  not  compan- 
ions to  their  husbands  and  fathers,  they  are  kept 

223 


LATTER-DAY  PROBLEMS 

in  accepted  ignorance  of  family  finances,  and  per- 
mit themselves  to  play  the  role  of  well-dressed 
dolls — for  which  they  must  share  the  responsi- 
bility with  the  men. 


We  may  be  too  close  to  the  events  to  per- 
ceive the  true  causes  at  work;  and  [perhaps  we 
may  not  sufficiently  discriminate  between  the  evil 
and  the  good  sides  of  the  transitional  movement 
now  before  our  eyes.  We  realize,  however,  that 
American  men  are  quite  too  good-natured  and 
leave  American  women  too  much  to  themselves 
with  an  unlimited  purse;  otherwise  we  should 
not  see  the  startling  things  done  by  audacious 
women,  living  in  Paris,  while  their  providers  are 
absorbed  in  their  business  ventures  at  home. 
Moreover,  life  has  become  much  more  compli- 
cated and  distracting;  so  many  more  things  have 
to  be  known,  considered,  decided  upon,  that  the 
unbalanced,  untrained  mind  reels  hi  confusion, 
and  neurasthenia  gathers  in  its  legion  of  victims. 
With  the  confidence  of  uneducated  minds  almost 
any  important  problem  is  attacked,  only  to  dis- 
play amazing  crudity,  shallowness,  and  inanity. 
There  is,  to  be  sure,  a  greater  rush  for  education, 

224 


WOMEN  AND   WEALTH 

but  it  is  a  question  whether  it  is  accompanied  by 
a  gain  of  ideals.  The  new  education  is  sought  for 
by  the  rich  woman,  much  as  is  modem  marriage, 
as  a  means  of  self-satisfaction,  and  not  as  a  means 
of  benefiting  others;  by  some  as  a  means  of  income 
in  order  to  get  larger  personal  satisfactions;  from 
a  desire  to  receive,  not  from  a  desire  to  give;  con- 
sidering not  what  one  can  bring  to  the  world,  but 
what  one  can  get  out  of  it.  That  is,  there  may  be 
more  education,  but  it  is  possible  that  it  has  come 
with  lower  ideals  of  duty  to  others.  This  matter 
of  drooping  ideals,  however,  may  be  only  a  conse- 
quence of  another  sweeping  current  of  change 
moving  alongside  the  swelling  tide  of  riches — the 
diminishing  strength  of  religion.  There  is  no  use 
shutting  our  eyes  to  it;  it  is  here.  Religious 
dogma  no  longer  has  the  old  influence  upon  our 
conduct — and  many  of  us,  looking  to  the  future, 
are  wondering  what  is  coming  to  take  its  place. 
In  many  communities  the  churches  are  kept  alive 
mainly  by  the  women.  If  they  are  to  find  the 
sanctions  of  religion  less  than  of  old,  what  have 
we  with  which  to  replace  the  influence  they  have 
exercised  in  the  past? 


225 


LATTER-DAY  PROBLEMS 

VI 

Whether  we  like  them  or  not  we  must  face  the 
facts  about  us.  The  characteristics  of  the  mod- 
ern type  of  rich  women  have  changed  from  those 
of  an  earlier  generation;  and  the  consequences 
which  are  already  noticeable  cannot  be  blinked. 

The  so-called  independence  of  womenkind — the 
greater  individuality  it  may  be — shows  its  unde- 
sirable side  in  a  wide-spread  self-indulgence  and 
selfishness.  Among  the  richer  classes,  the  general 
unwillingness  to  do,  or  even  to  hear  of,  anything 
unpleasant  is  so  marked  as  to  be  a  common  char- 
acteristic. This  phenomenon  of  to-day,  however, 
is  only  the  explanation  of  a  well-known  economic 
generalization  in  regard  to  the  family.  It  has 
long  been  observed  that  the  birth-rate  diminishes 
as  the  scale  of  riches  rises.  With  the  growth  of 
wealth,  we  must  be  prepared  to  expect — what  is 
now  evident  about  us — fewer  children  and  a  weak- 
ening of  family  ties.  As  much  as  possible,  noth- 
ing will  be  allowed  to  interfere  with  the  pursuit 
of  personal  gratifications. 

The  growth  of  selfishness,  under  the  name  of 
greater  freedom,  the  avoidance  of  tasks  and  hard- 
ships, the  desire  for  new  and  frequent  excite- 

226 


WOMEN  AND  WEALTH 

ments,  the  personal  delight  in  notoriety  have 
in  undue  measure  drawn  the  attention  of  such 
women  away  from  the  care  of  their  children.  But 
whatever  the  cause,  the  conscientious  supervi- 
sion of  the  morals  and  training  of  their  children  is 
not  to-day  what  it  used  to  be.  The  case  is  too 
common  to  be  rare  of  the  woman  who  makes  seri- 
ous sacrifices  if  she  may  but  strut  her  brief  hour 
in  those  houses  where  society  gluts  her  passion 
for  recognition.  The  sacrifices  in  order  to  have 
sufficiently  expensive  dresses,  the  worries  and  ex- 
travagance to  keep  up  with  those  who  are  richer, 
the  conscienceless  living  beyond  their  means  to 
satisfy  the  craving  for  social  excitement  are  seen 
and  known  by  the  children;  and  the  children  early 
become  snobs  and  unconsciously  imitate  the  stan- 
dards and  ideals  of  their  elders.  Thus  is  the  poison 
transmitted  into  the  blood  of  the  next  generation. 
It  is  safe  to  say  that  the  spread  of  divorce  is 
due  more  than  anything  else  to  the  personal  self- 
ishness, the  personal  extravagance,  and  the  per- 
sonal aversion  to  anything  unpleasant  of  the  mod- 
ern woman  of  the  world.  And  her  example  is 
of  influence  on  the  less  well-to-do  woman  whose 
unhappy  married  life  is  unrelieved  by  the  distrac- 
tions open  to  the  rich.  In  the  main,  the  unre- 

227 


LATTER-DAY  PROBLEMS 

strained  selfishness  and  the  exaggerated  extrava- 
gance leads  many  a  rich  woman  to  ask:  "What 
am  I  getting  out  of  it?" — not  "What  am  I  bring- 
ing to  it?"  The  willingness  to  control  self  from  a 
sense  of  duty,  a  steady  performance  of  tasks  for 
the  sake  of  a  given  object,  the  ability  to  sacrifice 
some  satisfactions  for  the  common  good,  to  be 
content  with  a  limited  income  are  rarer  than  they 
once  were.  At  the  bottom  it  is  the  domination  of 
the  rising  selfishness. 

The  forms  taken  by  this  selfishness  are  protean; 
but  the  one  which  has  a  large  economic  signifi- 
cance is  that  of  national  extravagance.  Not  hav- 
ing had  to  do  with  the  winning  but  only  with 
the  spending  of  wealth,  the  rich  woman  is  more 
or  less  responsible  for  the  criminal  lust  for  riches 
which  is  now  cursing  the  nation.  More  than  she 
can  possibly  realize,  her  discontent  at  not  having 
an  expenditure  equal  to  that  of  others  richer  than 
herself  is  the  cause  of  the  passion  to  get  rich 
quickly.  More  than  she  knows,  she  is  at  the  bot- 
tom of  speculation  and  of  the  schemes  for  get- 
ting wealth  other  than  by  saving  in  order  that 
men  may  be  able  to  gratify  her  demands.  It  has 
been  said  that  in  Europe  the  man  preys  on  the 
woman;  that  in  this  country  the  woman  preys 

228 


WOMEN  AND  WEALTH 

on  the  man.  More  than  she  knows,  she  is  respon- 
sible for  the  wide-spread  disposition  to  live  beyond 
one's  means;  for  the  mortgages  on  the  homes, 
the  showy  automobiles,  and  the  extravagant 
dresses  and  entertainments  which  aim  to  express 
social  superiority.  It  has  not  passed  unnoticed 
that  diamonds  to  the  value  of  $48,000,000  were 
imported  into  the  United  States  in  one  year. 
Traced  to  its  ultimate  analysis,  the  uncontrolled 
passion  for  pleasure  and  expensive  forms  of  grat- 
ification has  caused  a  living  beyond  our  means 
in  recent  years  and  influenced  the  extraordinary 
tendency  before  the  war  for  imports  to  exceed  ex- 
ports of  merchandise.  For  this  our  rich  and  our 
would-be-rich  women  are  in  a  degree  responsible. 
With  low  ideals,  additional  income  does  not  mean 
more  of  higher  satisfactions;  it  means  only  more 
foolish,  emulative,  showy  expenditures;  and  in 
this  competition — as  in  the  building  of  battle- 
ships— there  is  no  place  to  stop.  An  increase  of 
salaries  to  academic  men,  for  instance,  does  not 
necessarily  mean  more  thinking,  more  scholar- 
ship, more  books,  and  more  aids  to  learning;  it 
may  possibly  mean  only  longer  ostrich  feathers 
and  wider  hats  for  women  who  think  they  must 
compete  with  the  idle  rich. 

229 


LATTER-DAY  PROBLEMS 

vn 

It  is  obvious  that  any  person — man  or  woman 
— who  has  had  little  experience  of  the  sacrifices 
by  which  wealth  is  accumulated  is  open  to  the 
temptation  of  careless  or  wanton  expenditure. 
Due  to  the  very  fact  that  women  as  a  whole  have 
had  little  to  do  with  the  work  of  production  and 
exchange  of  wealth,  and  have  received  their 
means  largely  from  those  who  have  been  seasoned 
in  that  work,  it  is  but  natural  that  riches  should 
have  been  the  cause  of  more  or  less  deterioration 
in  the  fibre  of  many  women.  Idle  sons  who 
have  inherited  great  wealth  often  show  the  same 
weaknesses.  Hence  the  indictment  runs  directly 
against  a  large  class  of  American  women  to  whom 
it  has  been  given  to  spend  swollen  incomes. 

On  the  other  hand,  we  recognize  instinctively 
the  existence  of  a  numerous  class  of  women — 
the  "sound  remnant" — against  whom  this  indict- 
ment does  not  lie.  Possibly  it  may  be  answered 
that  those  who  are  not  rich  have  remained  uncor- 
rupted.  Unfortunately,  such  a  statement  cannot 
be  made  safely.  The  danger  is  not  confined  to 
those  who  have  the  means  to  spend.  The  passion 
for  social  position  is  almost  universal;  and  the 

230  ' 


WOMEN  AND  WEALTH 

example  of  the  rich  who  have  low  ideals  is  hun- 
grily followed  by  many  of  those  who  have  low 
incomes.  It  is  the  deteriorating  example  of  those 
who  guide  the  expenditure  of  the  rich  women  that 
is  spreading  widely  and  thoughtlessly  over  the 
great  class  outside  the  well-to-do.  The  danger 
lies  in  the  increasing  adoption  of  habits,  social 
customs,  and  expenditure  based  on  low  ideals — 
which  attracts  the  weaker  and  poorer  members 
of  the  sex  who  are  most  influenced  by  emulation. 
What  is  going  on  amongst  us  is  not  new;  it  is  an 
outcome  of  rapidly  growing  wealth,  like  that  in 
later  Rome,  or  in  England  when  Thackeray  wrote. 
It  is  no  reason  why  we  should  despair  of  the  re- 
public; but  it  is  a  grave  reason  for  sounding  the 
alarm  and  calling  for  higher  social  ideals. 

The  remedy  is  not  in  any  external  form  of  gov- 
ernment, not  in  legislation,  not  in  woman-suf- 
frage. There  will  be  no  change  for  the  better  ex- 
cept in  a  change  of  ideals — higher  ideals  and  a 
more  general  diffusion  of  them.  There  are  women 
— many  of  them — who  feel  the  sobering  respon- 
sibility of  the  power  given  by  riches  and  who 
think  carefully  of  the  effect  of  their  example  on 
others;  but  they  do  not  now  seem  to  be  hi  the 
majority.  We  all  know  the  familiar  type:  the 

231 


LATTER-DAY  PROBLEMS 

woman  of  some  beauty  and  personal  charm  who 
sold  herself  in  marriage  to  a  rich  man,  in  order 
that  during  his  life,  and  above  all  after  his  death, 
she  might  have  the  spending  of  untold  sums — 
not  to  better  the  world,  but  to  gratify  her  pride 
and  her  social  ambition.  If  all  that  wealth  were 
taken  away  from  her — the  sleek,  petted  favorite 
of  society — the  chief  damage  would  be  hurt  van- 
ity; there  would  be  no  loss  to  the  world,  no 
diminution  of  any  helpful  force  in  the  community. 
On  the  other  hand,  we  also  know  the  type — a 
rarer  one — of  the  woman  to  whom  a  husband  had 
left  large  wealth,  whose  pleasure  is  not  in  self- 
indulgence,  but  whose  wisdom  and  sympathy  in 
giving  is  such  that  the  power  of  her  riches  is  mul- 
tiplied an  hundredfold  and  whose  unselfish  life 
is  a  benediction  to  every  one  who  is  privileged  to 
know  her.  But  such  as  she  are  relatively  few  in 
number.  The  regeneration  of  the  ideals  of  society 
is,  unfortunately,  not  likely  to  come  from  the  well- 
to-do;  it  is  rather  necessary  to  plan  and  to  build 
in  spite  of  the  low  ideals  of  many  of  the  undisci- 
plined, pleasure-loving  rich.  Doubtless  our  only 
hope  is  from  the  greater  number  of  those  women 
who  have  had  the  privilege  and  blessing  of  limited 
incomes  and  who  have  known  the  discipline  due 

232 


WOMEN  AND  WEALTH 

to  a  life  of  self-sacrifice  and  self-control.  As  yet 
the  human  race  seems  to  be  unable  to  keep  its 
virility  when  given  unlimited  satisfactions.  For- 
tunately, riches  are  not  universal,  and  the  mass  of 
mankind  are  under  the  spur  of  necessity  to  high 
thinking  because  it  is  essential  to  their  material 
existence.  Fortunately,  also,  it  lies  hi  the  power 
of  each  woman  to  decide  for  herself  whether  she 
will  be  weakly  swept  along  by  the  prevailing  cur- 
rent of  self-indulgence  or  whether  she  will  rise 
to  the  responsibility  of  setting  higher  the  ethical 
standards  of  our  social  life.  Those  who  make  a 
poor  use  of  the  great  power  of  wealth  are  rela- 
tively few,  but  their  influence  is  relatively  great; 
yet  the  right-minded  women,  who  constitute  the 
great  majority  of  their  sex,  have  it  in  their  power 
to  minimize  the  abuses  of  wealth-power  by  the 
counteracting  force  of  a  scornful  public  opinion. 


233 


CHAPTER  IX 
MONOPOLY  OF  LABOR 


ECONOMIC  problems  startle  us  by  rising  out 
of  familiar  conditions  into  portentous  shapes 
and  finding  us  at  once  disturbed  and  unprepared. 
Our  economic  development  seems  to  have  gone 
on  more  rapidly  than  our  economic  education; 
more  rapidly  than  our  capacity  to  analyze  con- 
ditions, indicate  causes,  and  prescribe  remedies. 
Then,  too,  our  impatient  and  highly  individualis- 
tic democracy  rushes  quickly  to  conclusions  with- 
out much  caution  and  deliberation.  Change  is 
in  the  air;  action  is  quick  and  thought  is  slow. 
Discontent  acts  first  and  thinks  afterward.  Per- 
haps, however,  that  is  the  usual  law  of  progress  in 
a  democracy. 

In  matters  touching  the  working  man,  organiza- 
tion has  been  regarded  as  the  necessary  means  to 
progress,  and  there  is  little  doubt  that  intelligent 
organization  is  the  only  instrument  through  which 

234 


MONOPOLY  OF  LABOR 

important  ends  can  be  accomplished.  It  is  a 
serious  mistake,  however,  to  use  organization  as  a 
means  to  create  "class  consciousness/'  to  form  an- 
tagonisms where  there  should  be  none.  In  the  in- 
dustrial world,  all  are  laborers,  from  the  shoveller 
to  the  manager;  labor  is  not  only  physical  effort: 
some  of  the  most  exhausting  work  in  the  world 
is  mental  and  not  manual.  A  high-salaried  ex- 
pert is  as  much  a  member  of  the  laboring  class  as 
a  manual  laborer.  Very  little  reflection,  there- 
fore, is  needed  to  realize  that  patronizing  talk 
about  "the  laboring  classes"  is  extremely  shallow. 
Without  doubt,  the  real  cleavage  is  between 
the  rich  and  the  poor.  It  is  the  inability  of  the 
rich  to  understand  the  poor — and  the  inability  of 
the  poor  to  understand  the  rich — that  is  the  root 
of  all  industrial  conflict.  We  need,  therefore,  to 
appeal  for  more  sympathy  and  mutual  under- 
standing. "The  laborer  is  worthy  of  his  hire." 
Those  who  bear  the  burden  and  the  heat  of  the 
day  deserve  the  consideration  due  to  the  vital 
forces  underlying  our  great  economic  prosperity 
and  our  future  progress.  Those  of  us  who  have 
often  seen  the  day  when  it  was  uncertain  where 
the  next  meal  would  come  from  know  what  "  the 
struggle  for  existence"  means;  the  sense  of  isola- 

235 


LATTER-DAY  PROBLEMS 

tion  in  the  face  of  the  great  powerful  forces  of 
the  successful  world;  to  be  poor  and  yet  to  wan- 
der through  miles  of  streets  filled  with  opulent 
homes;  to  see  absolutely  no  bridge  crossing  the 
seemingly  impassable  gap  from  ignorance  and  pov- 
erty to  intelligence  and  wealth;  to  begin  to  feel 
as  if  one  were  in  an  inferior  class  whose  interests 
were  all  arrayed  in  hostility  against  those  who  pos- 
sess the  comforts  and  luxuries  of  life;  and  then 
to  develop  somewhat  of  the  bitterness  of  those 
who  have  not  against  those  who  have.  It  is  diffi- 
cult to  see  all  sides  of  a  case  when  one  is  "down 
and  out";  it  is  human  to  think  that  the  lack  of 
success  is  not  in  ourselves  but  in  others,  not  in 
the  want  of  common  sense,  industry,  sobriety, 
and  skill,  but  in  the  greed  and  mercilessness  of 
those  who  care  only  for  the  value  of  the  service 
rendered. 

To-day,  in  this  country  of  new  opportunity, 
we  know  there  are  legions  who  have  started  with 
nothing  'and  yet  who  have  with  honor  accumu- 
lated a  competence.  That  has  been  done.  Yet 
everywhere  about  us  there  are  those  who  have 
not  succeeded — who  feel  dumb,  hopeless,  discour- 
aged— but  who  do  not  like  to  accept  the  inevi- 
table lifelong  conditions  of  depressing,  grinding 

236 


MONOPOLY  OF  LABOR 

poverty.  Therefore,  when  we  attempt  to  discuss 
the  ways  by  which  the  laborer  may  escape  from 
his  poverty  (or  even  the  ways  by  which  the  man 
who  already  has  something  may  improve  his  con- 
dition) we  ought  to  be  willing  to  take  into  account 
all  sides  of  the  question,  to  be  sympathetic  with 
failure,  but  to  be  as  just  as  the  surgeon  who  cuts 
out  the  cause  of  the  disease. 

n 

In  the  most  commonplace  things  of  every-day 
life  we  find  the  stuff  on  which  to  test  our  reason- 
ing about  life,  our  theories  as  to  success  and  fail- 
ure, our  plans  to  improve  the  conditions  of  exis- 
tence. To-day  the  ugly  thing  which  hits  us  in 
the  face  wherever  we  turn  is  the  high  cost  of  liv- 
ing. The  way  we  handle  that  problem  is  a  fair 
test  of  ourselves,  of  our  insight,  our  experience, 
our  breadth  of  view,  our  capacity  for  fairness  and 
impartial  examination,  and  our  freedom  from 
prejudice  and  emotion. 

Viewed  from  the  position  of  those  who  have  a 
very  limited  income — and  those  are  the  ones  who 
most  concern  us;  for  the  well-to-do  can  generally 
look  out  for  themselves — the  steady  rise  in  the 
prices  of  nearly  every  article  of  daily  consumption 

237 


LATTER-DAY  PROBLEMS 

is  a  very  serious  thing.  It  is  like  the  contracting 
walls  of  a  prison  closing  in  on  its  victims.  Either 
the  walls  must  stop  contracting  or  the  inmates 
must  be  able  to  get  out.  Which  is  it  likely  to  be  ? 
The  first  indisputable  fact  we  find  in  the  strug- 
gle of  the  poorer  classes  to  better  their  condition 
is  that,  while  money  wages  have  risen,  prices  have 
risen  correspondingly;  that  the  higher  wages  pur- 
chase very  little,  if  any,  more  than  they  did  be- 
fore. Consequently,  no  sooner  has  an  increase  of 
wages  been  obtained  by  the  hardest  kind  of  effort 
and  struggle  than  the  demand  for  another  wage 
increase  becomes  as  necessary  as  it  ever  did  be- 
fore, because  increasing  prices  have  again  cut  into 
the  margin  of  subsistence.  What  are  we  going 
to  do  about  it?  If  wages  were  to  increase  from 
$2  to  $200  per  day,  and  prices  to  increase  one 
hundred  times,  wherein  should  we  be  better  off? 

m 

The  economists  of  the  labor  unions — we  say 
"economists,"  for,  whether  trained  or  not,  they 
are  in  fact  applying  their  minds  to  one  of  the  most 
difficult  of  all  economic  problems,  namely,  the 
causes  determining  wages — have  very  emphat- 
ically announced  one  particular  solution  of  this 

238 


MONOPOLY  OF  LABOR 

question  of  wages  and  cost  of  living.  They  have 
declared  with  all  the  reasoning  they  possess,  en- 
forced by  the  power  of  their  unions,  that  the  solu- 
tion of  this  vital  question  for  them  is  to  be  found 
in  the  "  Monopoly  of  Labor."  They  have  taken  a 
leaf  out  of  the  past  history  of  industry,  and  from 
that  have  assumed  their  principle  of  economics 
to  be  the  fixing  of  the  prices  of  labor  by  control 
over  the  supply.  And  why  not?  Have  not  the 
great  combinations  in  many  staple  articles  of 
general  consumption  attempted  to  fix,  or  even 
succeeded  in  fixing,  prices  by  a  control  over  the 
supply?  Is  not  sauce  for  the  goose  also  sauce  for 
the  gander  ?  If  the  employers  resort  to  the  theory 
of  monopoly,  why  should  not  the  laborers? 

The  unions  have  a  definite  objective:  to  in- 
crease wages  (not  merely  money  wages,  but  real 
wages) ;  that  is,  to  get  more  reward  for  the  same 
effort  per  hour  or  per  day,  or  to  get  the  same 
wages  for  a  less  number  of  hours;  and  to  better 
the  sanitary  and  hazardous  conditions  of  work. 

Such  being  the  working  man's  objective,  and 
"monopoly  of  labor"  being  the  means  adopted  to 
secure  that  end,  we  must  calmly  inquire  as  to 
whether  or  not  it  will  work.  Indeed,  it  is  more 
to  the  interest  of  the  laborer  than  any  one  else 

239 


LATTER-DAY  PROBLEMS 

to  have  tested  the  practicability  of  this  method, 
which  is,  in  fact,  the  generally  accepted  method  of 
working  men's  organizations.  In  the  long  run 
nothing  can  succeed  which  is  untrue.  If  a  doc- 
trine is  futile,  sooner  or  later  it  must  be  aban- 
doned, even  by  a  labor  union. 

In  the  first  place,  this  country  has  declared 
itself  against  monopoly,  or  practises  in  restraint 
of  competition.  As  against  producers,  the  Sher- 
man Anti-Trust  Law  has  been  invoked  in  a  way 
to  draw  the  attention  of  every  one.  Quite  inde- 
pendently of  the  merits  of  the  act,  it  is  now  on  the 
statute  books.  In  any  democratic  society  the  law 
must  have  no  favorites:  it  cannot  be  applied  to 
the  poor  and  not  to  the  rich;  nor  can  it  be  applied 
to  one  combination  and  not  to  another.  All  must 
be  equal  before  the  law.  Labor  leaders  seem  to 
understand  that  their  theory  of  monopoly  is  ex- 
posed to  the  penalties  of  the  Anti-Trust  Law.  It 
is  to  be  assumed  that  this  statement  has  been  es- 
tablished by  the  Danbury  Hatters'  case.  Indeed, 
in  the  closing  hours  of  a  recent  Congress  (Febru- 
ary, 1913)  vain  attempts  were  made  to  except 
labor  unions  from  the  act  which  forbids  monopoly; 
and  in  the  Sundry  Civil  Appropriation  Bill  of  the 
extra  session  of  Congress  (1913),  finally  signed  by 

240 


MONOPOLY  OF  LABOR 

President  Wilson,  the  same  question  arose.  With- 
out doubt  the  American  people  have  determined 
to  prevent  monopoly  wherever  the  federal  law  can 
reach  it.  How,  then,  can  a  doctrine  of  the  mo- 
nopoly of  labor  continue  to  exist  in  the  face  of 
definite  statutory  prohibition?  Any  law  which 
would  except  labor  unions,  in  case  they  violate  it, 
from  the  provisions  of  the  act  would  be  uncon- 
stitutional and  could  not  stand.  There  is  evi- 
dently no  escape  in  this  direction. 

It  is  childish  to  assume  that  raising  such  a 
question  indicates  any  hostility  to  labor  unions. 
Quite  the  contrary:  one  would  be  an  enemy  of 
labor  who  would  suggest  a  road  up  which  it  should 
laboriously  climb  for  years  only  to  find  out  at  the 
end  that  the  way  was  absolutely  closed  to  pas- 
sage. It  is  high  time  to  inquire  who  are  the  true 
friends  of  labor:  those  who  are  exploiting  the 
economic  ignorance  of  laborers  for  selfish  or  po- 
litical purposes  or  those  who  would  like  to  help 
them  to  a  means  of  permanent  improvement  and 
independence? 

IV 

If,  then,  monopoly  of  labor  is  contrary  to  the 
law,  what  is  the  remedy?  Is  the  law  wrong,  and 

241 


LATTER-DAY  PROBLEMS 

should  it  be  repealed?  Shall  we  grant  unregu- 
lated monopoly  to  big  combinations  of  capital  as 
well  as  to  big  combinations  of  labor?  Both  must 
be  equal  before  the  law.  Is  the  law  economically 
unjustified  ?  A  word  or  two  may  not  be  amiss  in 
a  brief  analysis  of  monopoly  as  applied  to  labor. 

Monopoly  means  the  control  of  the  supply  in 
a  given  market.  Monopoly  is  like  the  wall  about 
an  enclosure  with  no  gate  in  it  open  to  the  public. 
Monopoly  excludes  competition.  Competition  is 
like  a  gate  through  the  wall  by  which  the  public 
have  free  access.  Competition  is  the  free  entrance 
of  goods  or  of  any  of  the  factors  of  production 
(such  as  labor,  capital,  managerial  ability)  into 
any  market.  There  is  nothing  complex  about  it. 
A  monopoly  of  labor  is  a  control  of  the  supply  of 
any  kind  of  labor  at  any  point  of  demand.  Free 
competition  of  labor  is  the  ability  of  any  man  to 
enter  the  market  for  employment  on  equal  terms 
with  any  other  man. 

Monopoly  assumes  different  forms.  A  "strict 
monopoly"  exists  if  some  authority  has  control  of 
the  whole  supply  in  the  market.  We  very  seldom 
find  a  "strict  monopoly."  The  wall  must  be  so 
high  and  so  tight  that  none  can  enter  over  or 
through  it;  those  inside  have  no  competition. 

242 


MONOPOLY  OF  LABOR 

But  only  by  the  control  of  the  whole  supply  can 
the  price  to  the  buyer  be  finally  fixed.  If  the  wall 
be  low,  or  broken  in  spots,  more  or  less  entrance 
is  afforded  to  others;  and  so  more  or  less  control 
over  price  is  wanting.  In  the  case  of  labor  it  is 
very  rare  to  find  any  such  control  over  supply  as 
gives  a  complete  monopoly,  for  the  reason  that 
unions  do  not  include  all  men  of  a  certain  trade,  or 
those  who  may  enter  the  occupation  by  a  short 
period  of  training,  or  the  supply  which  may  come 
from  another  part  of  the  country,  or  from  foreign 
countries.  It  is  stated  in  general  that  unionized 
labor  comprises  less  than  10  per  cent,  of  the  total 
number  of  persons  engaged  in  gainful  occupations 
hi  the  United  States.  Without  question,  there- 
fore, it  may  be  assumed  that  unions  do  not  have  a 
"strict  monopoly,"  and  cannot  control  the  rates 
of  wages,  where  more  or  less  competition  exists. 
This  general  conclusion  jumps  with  the  well-known 
fact  that  strikes  are  usually  accompanied  by  vio- 
lence exerted  to  prevent  competitors  from  taking 
the  places  of  the  strikers.  In  fact,  the  inability  to 
control  the  supply  and  gain  the  practical  effects 
of  monopoly  is  the  very  reason  why  in  some  cases 
terrorizing  methods  and  dynamite  have  been  re- 
sorted to.  A  "closed  shop"  is  itself  evidence  of 

243 


LATTER-DAY  PROBLEMS 

the  inability  of  a  union  to  control  the  supply  of 
its  labor  and  so  fix  prices. 

The  existence  of  monopoly  may  be  ascribed 
either  to  artificial  or  natural  causes.  An  "  artificial 
monopoly"  is  a  control  of  supply  due  to  excep- 
tional privileges,  such  as  special  legislation,  patent 
or  copyright  laws;  or  to  undue  influence,  duress, 
unfair  discriminations,  unjust  treatment,  and  the 
like.  That  is,  the  kind  of  monopoly  which  has 
excited  universal  disapprobation  is  the  one  founded 
on  unjust  suppression  of  competition  and  forcible 
ways  of  driving  out  competitors.  Recent  trust 
decisions  have  been  based  on  that  claim.  What- 
ever objections  exist  to  monopoly  have  peculiar 
urgency  against  these  forms  of  "  artificial  monop- 
oly," although  it  must  be  remembered  that  cer- 
tain kinds  even  of  "artificial  monopoly"  may  be 
justified  on  the  ground  of  some  desirability  to  the 
state,  such  as  a  business  artificially  created  by  a 
patent  or  a  copyright.  But,  as  a  whole,  a  mo- 
nopoly due  to  special  privilege,  or  to  unfair  or  for- 
cible suppression  of  competition,  cannot  for  a  mo- 
ment hope  for  support  from  a  fair-minded  people 
like  ours.  Such  a  monopoly  is  to-day  illegal;  and 
the  law  seems  to  be  good  legislation.  Since  a  con- 
trol of  labor  by  unions  is  an  "artificial  mo- 

244 


MONOPOLY  OF  LABOR 

nopoly,"  not  based  on  any  natural  causes  (such 
as  skill,  intellect,  and  so  forth),  it  has  come  under 
the  penalties  of  the  law  whenever  it  has  at- 
tempted to  baffle  competition  of  labor. 

Finally,  there  is  "natural  monopoly,"  due  to 
superiority  of  a  personal  or  physical  character.1 
Under  purely  competitive  conditions,  where  all 
have  an  equal  opportunity,  the  superior  person 
will  surpass  his  inferiors  in  the  industrial  world; 
he  will  labor,  or  do  business,  more  efficiently  and 
cheaply  and  drive  out  the  inferior  rival.  A 
"natural  monopoly "  is  based  on  the  admitted 
inequality  of  mankind;  it  is  the  inevitable  ex- 
pression of  superiority  in  the  field  of  open  com- 
petition. For  instance,  although  there  was  open 
competition  in  the  law,  Daniel  Webster  occupied 
almost  a  monopoly  position  because  he  had  few 
rivals.  Likewise,  a  winner  of  an  international 
marathon  race  is  such  by  virtue  of  a  natural  mo- 
nopoly. So,  too,  there  may  be  a  class  of  laborers 
who  have  won  a  monopoly  position  because  of 
the  possession  of  exceptional  skill  and  personal 
worthiness.  This  is  the  only  kind  of  a  monopoly 

1  Being  here  concerned  with  persons,  we  need  not  discuss 
monopoly  due  to  possession  of  natural  resources,  such  as 
anthracite  coal-beds  and  the  like. 

245 


LATTER-DAY  PROBLEMS 

which  is  legal  and  whose  position  is  likely  to  be 
permanent. 

If  there  is  free  competition,  the  superior  man 
will  always  outstrip  the  inferior;  he  will  do  the 
lion's  share  of  business  because  of  a  monopoly  due 
to  natural  ability.  Hence,  whenever  conditions 
are  equal  for  all,  we  must  expect  to  find  monopoly 
— natural,  not  artificial.  This  is  the  law  of  nature. 
In  fact,  the  labor  world  itself  is  full  of  monopo- 
listic conditions:  there  are  non-competing  strata 
of  workmen  superimposed  one  above  the  other — 
from  the  unskilled  hod-man  to  the  skilled  engi- 
neer of  the  Panama  Canal — between  whom  there 
is  no  competition  for  the  same  kind  of  employ- 
ment. Natural  monopoly  is  everywhere;  skill 
gives  monopoly  and  freedom  from  the  competi- 
tion of  those  who  lack  skill.  So  also  brains  give 
monopoly.  In  fact,  monopoly  is  unescapable — so 
long  as  men  are  born  unequal  in  body  and  mind. 
When  President  Wilson,  in  his  Chicago  address, 
said  there  must  be  "no  features  of  monopoly,"  he 
undoubtedly  meant  no  features  of  unjust  "arti- 
ficial monopoly";  for  natural  monopoly  exists 
everywhere. 


246 


MONOPOLY  OF  LABOR 


Since,  then,  the  fundamental  economic  princi- 
ple on  which  labor  unions  are  based  is  the  mo- 
nopoly of  the  supply  of  labor;  since  a  strict  mo- 
nopoly and  control  of  wages  by  a  control  over  the 
whole  supply  is  practically  impossible;  since  mo- 
nopoly of  labor  and  exclusion  of  any  man  from  a 
free  chance  to  compete  is  already  contrary  to  the 
laws  of  the  land,  some  doubt  has  been  cast  on 
the  wisdom  and  efficacy  of  the  principle  of  mo- 
nopoly of  labor  as  a  means  of  improving  the  con- 
ditions of  life  for  working  men.  It  now  remains  to 
examine  whether,  from  a  purely  economic  point 
of  view,  higher  wages,  forced  by  the  principle  of 
monopoly  as  applied  by  labor  unions,  will  really 
add  to  their  consuming  power  and  bring  about  the 
ends  they  have  in  mind. 

If  a  shoemaker  had  to  pay  more  for  leather,  he 
would  undoubtedly  charge  more  for  his  shoes, 
cateris  paribus.  If  an  increased  tax  were  levied  on 
imported  sugar  or  coffee,  the  price  would  be  raised 
accordingly  and  the  burden  of  the  tax  passed  on 
to  the  consumer.  In  short,  it  is  an  economic  com- 
monplace (for  goods  freely  reproducible)  that  an 
increase  of  any  of  the  items  entering  into  a  pro- 

247 


LATTER-DAY  PROBLEMS 

ducer's  expenses  of  production  will  cause  an  in- 
crease in  the  price  paid  by  the  public  for  that  pro- 
ducer's goods.  When  the  wages  of  the  miners  in 
the  anthracite  coal  mines  were  increased,  the  price 
of  coal  per  ton  to  the  consumer  was  correspond- 
ingly raised.  The  public,  not  the  employers,  paid 
the  higher  wages. 

Wages  are  evidently  an  important  constituent 
in  the  expenses  of  producing  most  staple  articles. 
An  increase  of  wages  paid  for  the  same  time  and 
same  skill  of  laborers  will  raise  the  prices  of  the 
goods  they  are  working  on  just  as  surely  as  will  an 
increase  of  taxes  or  of  the  cost  of  materials.  Re- 
duce taxes,  and  by  so  much  the  expenses  of  pro- 
duction and  prices  to  the  public  will  fall — or 
ought  to  fall.  Reduce  the  tariff — taxes  on  cloth- 
ing, etcetera — and  by  so  much  prices  and  cost  of 
living  should  be  reduced. 

Now,  as  a  matter  of  cold  fact,  how  has  the  work- 
ing man  fared  with  this  method  of  raising  wages 
in  recent  years?  In  the  principal  manufacturing 
and  mechanical  industries,  leaving  out  salaried 
employees,  in  the  ten  years  from  1897-1907  (ac- 
cording to  the  index  number  of  the  Bureau  of 
Labor)  wages  had  risen  from  99.2  to  122.4,  °r  23 
per  cent.,  while  retail  prices  for  food  had  increased 

248 


MONOPOLY  OF  LABOR 

from  96.3  to  120.6  or  25.5  per  cent.  That  is,  the 
purchasing  power  of  wages  over  food  fell  2.5  per 
cent,  during  that  period  of  unusual  expansion  of 
business.  In  short,  the  whole  effect  of  the  wage- 
increase  had  been  nullified  by  the  rise  in  the  prices 
of  food  usually  consumed  in  the  family  budget. 
After  all  the  bad  blood  stirred  up  in  some 
twenty  years  the  unions  have  accomplished  prac- 
tically nothing  toward  raising  their  power  of  con- 
sumption as  regards  food.  Obviously,  something 
is  very  far  wrong  with  the  principle  on  which 
they  are  operating.  They  have  climbed  this  hard, 
up-hill  road  for  decades  only  to  find  no  passage 
through  at  the  end.  Economically,  the  principle 
of  monopoly  of  labor  does  not  work  in  favor  of 
the  laborer.  Why?  It  is  very  important  that,  in 
their  own  interest,  they  should  know  the  reason 
why. 

VI 

From  the  purely  economic  point  of  view  the 
reason  is  simple.  An  increase  of  wages  paid  for 
the  same  productive  effort  increases  the  expenses  of 
production  and  the  price  of  the  product;  an  in- 
crease in  prices  of  articles  consumed  by  the  laborer 
reduces  the  real  wages  of  the  laborer  as  much  as, 
if  not  more  than,  the  increase  in  money  wages. 

249 


LATTER-DAY  PROBLEMS 

He  is  just  where  he  was  before,  without  any  gain 
for  his  pains.  In  an  industry  producing  an  arti- 
cle of  general  use  (supposing  entirely  free  compe- 
tition), an  increase  of  expenses  of  production  due 
to  an  increase  of  money  wages  paid  for  the  same 
effort  will  be  followed  by  a  compensating  increase 
of  prices  to  the  consumer;  and  the  laborer  is  a 
consumer.  Of  course,  if  competition  is  not  free, 
and  monopolistic  conditions  of  production  exist, 
prices  might  go  still  higher.  This  increase  of 
price,  mark  you,  is  not  under  the  control  of  the 
labor  unions.  Even  if  they  could  control  wages, 
they  could  not  control  the  prices  of  the  articles 
they  consume.  If  the  laborer,  standing  in  a  rising 
tide  of  water,  succeeds  in  raising  the  platform  un- 
der him  by  a  foot,  and  if  the  water  then  rises 
about  his  head  by  another  foot,  he  is  just  as  near 
drowning  as  before. 

There  is  no  question  whatever  in  my  mind  that 
the  rise  of  prices  of  almost  all  articles  of  general 
consumption  during  the  last  decade  or  two  has 
been  due,  as  much  as  to  any  one  thing  else,  to  the 
rise  hi  money  wages  paid  for  the  same,  or  even 
less,  labor  effort.1  Moreover,  the  effect  is  cumu- 

1  It  is  not  an  answer  to  say  that  the  rise  of  prices  is  due 
to  an  increased  production  of  gold,  because  a  change  on  the 

250 


MONOPOLY  OF  LABOR 

lative.  In  the  expenses  of  producing  raw  ma- 
terials such  as  coal,  ore,  wool,  and  the  like,  into 
whose  processes  labor  enters  more  largely  than 
machinery,  the  general  rise  of  wages  raises  out 
of  all  proportion  the  prices  of  materials  from  which 
finished  goods  are  made.  In  1905  the  total  value 
of  manufactured  products  in  the  United  States 
was  $14,802  millions,  of  which  wages  made  up  18 
per  cent,  and  materials  60  per  cent.  Thus  the 
increasing  costs  of  wages  and  materials  together 
unite  in  pushing  up  the  prices  of  goods. 

Take  the  prices  of  food  and  agricultural  prod- 
uce, for  example.  We  have  been  seeing  a  silent, 
irresistible  revolution  going  on  in  American  agri- 
culture. The  movement  from  the  farm  to  the 
city  has  been  marked  hi  all  countries  and  has 
made  labor  scarce  and  high-priced  on  the  farm. 
The  great  rise  in  the  price  of  farm  lands  has  in- 
side of  money  should  affect  all  commodities  alike,  while  the 
movement  of  prices  is  very  irregular.  Moreover,  the  quan- 
tity theory  of  money  on  which  this  answer  depends  is  not 
generally  accepted.  Of  course,  other  elements  than  wages 
enter  into  expenses  of  production  and  have  an  influence  on 
price. 

In  cases  of  scarcity  raw  materials  may  rise,  irrespective 
of  wages.  Also  a  great  rise  of  wages  may  be  prevented 
from  raising  prices  pro  tanto  by  compensating  improvements 
or  cheapening  processes  introduced  by  the  producers. 

251 


LATTER-DAY  PROBLEMS 

creased  the  investment  needed  for  growing  food 
products.  Men  will  stay  on  the  farm  only  when 
they  receive  as  high  wages  as  they  can  get  in  the 
city  and  when  they  receive  as  high  a  return  on 
the  capital  invested.  If  farmers  charged  up  to 
expenses  of  production  the  interest,  at  5  per  cent., 
on  the  price  of  land,  buildings,  and  improvements, 
and  added  reasonable  wages  for  the  labor  of  them- 
selves and  the  members  of  the  family,  such  as 
they  might  get  in  the  city,  it  would  be  found  in 
most  cases  that  even  the  present  high  prices  of 
vegetables,  eggs,  and  butter  would  not  cover  the 
expenses  of  production.  They  go  on  practically 
without  systematic  book-keeping,  not  counting 
their  labor  and  glad  to  earn  a  living. 

Wealth  gained  in  agriculture  in  the  last  few 
decades  has  not  come,  in  the  main,  from  growing 
crops  but  from  the  enormous  rise  in  the  value  of 
land.  When  labor  is  accounted  for  in  agriculture 
as  fully  as  in  manufactures,  agricultural  products 
are  sure  to  hold  a  higher  price  relatively  to  manu- 
factured goods,  because  machinery  can  be  used  in 
the  latter  to  reduce  somewhat  the  tendency  of 
the  labor  cost  to  rise.  Increase  in  farm  wages, 
and  hence  in  the  expenses  of  production,  is  in- 
creasing the  prices  of  all  farm  products. 

252 


MONOPOLY  OF  LABOR 

The  true  bearing  of  the  labor  situation  cannot 
be  mistaken.  The  unions  are  enforcing  the  theory 
of  monopoly  of  labor  as  a  means  of  raising  their 
wages  and  improving  their  condition.  They  may 
raise  their  wages,  but  they  do  not  raise  their  con- 
dition. The  monopoly  created  is  an  "artificial" 
one,  maintained  by  violence  or  by  unfair  restric- 
tion of  competition,  which  is  clearly  illegal;  the 
increase  of  wages  thus  obtained,  without  an  in- 
crease in  the  efficiency  of  production,  inevitably 
carries  with  it  an  increase  in  the  expenses  of  pro- 
duction and  of  prices,  which  automatically  re- 
duces the  purchasing  power  of  the  higher  wages  to 
the  old  level.  There  is  no  hope  for  this  principle 
either  in  law  or  economics.  It  does  not  work  in 
the  interests  of  labor. 

There  are  two  sets  of  forces  hi  action,  indepen- 
dent of  each  other.  On  the  one  hand,  wages  are  to 
be  raised;  on  the  other,  prices  are  to  be  raised. 
These  two  sets  of  forces  are  not  under  common 
control.  The  one  nullifies  the  other.  Now,  what 
is  the  remedy?  Nothing  under  heaven  but  the 
bringing  of  the  two  into  some  co-operation  for 
the  gain  of  both.  It  is  of  no  advantage  to  the  pro- 
ducer to  raise  prices  per  se,  since  with  proportion- 
ally higher  expenses  of  production  he  would  make 

253 


LATTER-DAY  PROBLEMS 

practically  no  greater  profits  by  the  higher  prices 
than  he  did  before.  It  is  of  no  advantage  to  the 
laborer  to  raise  wages  per  se,  since  with  higher 
money  wages  he  can  buy  no  more  than  he  did  be- 
fore. The  result,  being  no  gain  either  to  the  pro- 
ducer or  to  the  laborer,  yet  creates  an  impossible 
situation  for  the  general  consuming  public  by  the 
steady  rise  in  the  cost  of  living. 

The  monopoly-of-labor  principle  has  not  much 
more  to  its  credit  than  antagonisms.  The  case 
against  it  legally,  economically,  and  morally  is 
overwhelming.  And  yet  in  a  recent  contest 
over  the  immigration  bill  in  Congress  the  labor 
unions  wished  to  apply  the  literacy  tests  to  im- 
migrants in  order  to  prevent  an  increase  in  the 
supply  of  labor.  Economically  speaking,  this  is 
Darkest  Africa. 

vn 

The  remedy  can  be  found  only  in  the  co-opera- 
tion of  both  laborers  and  producers,  to  the  end 
that  real  wages  may  be  raised  without  the  increase 
of  prices  by  the  producer.  This  is  not  impossible; 
but  it  means  a  complete  reversal,  from  the  prin- 
ciple of  the  "artificial  monopoly"  of  the  labor 
unions,  to  the  principle  of  the  "natural  monopoly" 

254 


MONOPOLY  OF  LABOR 

of  labor.  This  is  the  solution  in  a  nutshell.1  What 
does  that  mean ?  "Natural  monopoly,"  as  regards 
labor,  is  based  on  superiority  due  to  skill  and  per- 
sonal worth  working  under  conditions  of  entirely 
free  and  unrestricted  competition.  Under  com- 
petitive conditions  the  more  productive  labor 
will  obtain  the  higher  wages;  and  labor  that  is 
more  productive  does  not,  when  it  receives  higher 
wages,  increase  the  expenses  of  production  or 
cause  higher  prices.  The  laborer  who  works  hi 
co-operation  with  the  efforts  of  the  producer  to 
increase  production,  say  from  80  to  100  units, 
with  the  same  outlay,  can  have  his  wages  increased 
20  per  cent,  and  yet  leave  5  per  cent,  of  new  gain 
to  the  producer — without  any  increase  of  prices. 
In  short,  higher  money  wages  may  go — and  fre- 
quently have  so  gone  in  the  history  of  industry — 
with  a  fall  of  prices.  Thus  laborers  would  gain 
doubly,  not  only  by  the  higher  money  wages,  but 
by  the  greater  purchasing  power  of  those  wages. 
This  is  a  very  different  outcome  from  that  due 
to  the  "artificial  monopoly"  of  labor.  Moreover, 
it  is  democratic,  legal,  moral,  and  economically 
sound. 

But,  says  the  objector,  the  laborer  who  is  un- 
1  Cf.  supra,  chapter  I. 
255 


LATTER-DAY  PROBLEMS 

sophisticated  enough  to  follow  this  advice  will 
not  obtain  from  grasping  individual  employers 
the  higher  wages  due  to  increased  efficiency. 
Then  organize  and  get  it.  Organization  of  labor 
is  of  vital  importance.  There  is  no  objection  to 
the  union  as  a  form  of  organization;  but  there  is 
objection  to  the  wrong  use  of  the  union.  The 
principle  of  "  artificial  monopoly"  of  labor  may  be 
all  wrong,  but  the  principle  of  organizing  labor 
in  a  union  may  be  all  right.1  A  heavy  walking- 
stick  may  be  wrongly  used  in  knocking  down  and 
robbing  victims;  but  it  may  be  well  used  in  pro- 
tecting the  owner  from  footpads.  If  admission 
to  a  union  were  based  on  efficiency  tests,  and  its 
members  held  a  natural  monopoly  due  to  superior 
skill,  those  outside  the  union  could  not  compete 
with  them;  and  there  would  be  no  more  need  for 
the  "closed  shop,"  or  for  dynamite. 

vm 

The  hysterical  agitation  for  a  minimum  wage 
(to-day  urged  chiefly  for  women)  has  in  it  no  con- 
ception of  a  relation  between  wages  and  produc- 

1  It  is  incorrect  to  represent  me  as  opposed  to  collective 
bargaining,  as  was  done  by  John  Mitchell,  Atlantic  Monthly, 
February,  1914,  p.  162. 

256 


MONOPOLY  OF  LABOR 

ing  power.  It  is  unsound  for  several  reasons 
which  touch  the  very  interests  of  the  laborers 
themselves. 

It  introduces  a  new  and  unjustifiable  basis  of 
wages — that  wages  shall  be  paid  on  the  basis  of 
what  it  costs  the  recipient  to  live.  If  it  is  urged, 
for  instance,  that  a  woman  cannot  live  on  $5.00 
a  week,  but  can  live  on  $8.00,  and  hence  her 
minimum  wage  should  be  $8.00,  the  whole  case 
has  not  been  considered.  If  we  accept — what 
we  should  not  accept — the  principle  that  wages 
should  be  related  to  the  cost  of  living,  and  if  it  is 
accepted  that  the  woman  could  live  on  $8.00  a 
week,  on  what  grounds  should  she  ever  receive 
more  than  $8.00  a  week?  On  what  grounds  could 
any  one  get  $18.00  a  week?  At  present  $18.00  is 
paid  on  the  ground  that  it  is  earned,  that  is,  on 
the  basis  of  a  relation  between  wages  and  produc- 
ing power.  No  other  basis  can  stand  for  a  moment 
in  the  actual  work  of  industry.  Men  go  into  busi- 
ness to  gain  profit;  if,  in  their  opinion,  the  em- 
ployee is  not  worth  $8.00  a  week,  she  will  not  be 
retained,  no  matter  what  it  costs  to  live.  If  she 
is  worth  to  the  business  $18.00  that  will  be  the 
wage.  No  law  can  force  any  one  to  remain  in  a 
business  that  does  not  pay. 

257 


LATTER-DAY  PROBLEMS 

The  theory  of  a  minimum  wage  based  on  the 
cost  of  living  is  flatly  inconsistent  with  the  facts 
of  daily  life  and  preparation  for  any  occupation. 
At  what  age  or  point  is  a  beginner,  or  apprentice, 
to  receive  the  full  legal  wage?  Is  no  boy,  or  ap- 
prentice, to  be  allowed  to  receive  a  partial  reward 
till  he  is  a  full-fledged  adult  workman?  How 
about  the  woman  who,  in  the  economic  role  of 
domestic  labor,  knits  stockings  in  odd  hours  in 
order  to  add  a  little  to  the  family  income — shall 
she  receive  nothing  if  not  the  full  legal  wage? 
Shall  the  boy,  or  even  a  young  lawyer  just  enter- 
ing an  office,  be  forbidden  to  receive  the  small 
stipend  of  the  preparatory  period? 

Suppose  it  were  required  by  law  to  pay  shop- 
girls $8.00  a  week  instead  of  $5.00,  on  the  ground 
that  the  insufficient  $5.00  leads  to  vice;  then, 
since  no  ordinary  business  would  pay  $8.00  unless 
it  were  earned,  those  who  did  not  earn  $8.00 
would  inevitably  be  dropped  from  employment 
without  even  the  help  of  $5.00  to  save  them.  If 
$5.00  is  no  protection  from  vice,  how  much  less 
is  no  wages  at  all?  This  proposal  of  a  minimum 
wage  is  directly  opposed  in  practice  to  the  very 
self-interest  of  the  girls  themselves. 

It  is  crass  to  try  to  remedy  wages  which  are 
258 


MONOPOLY  OF  LABOR 

admittedly  too  low  by  fixing  a  legal  minimum 
wage,  which  can  never  be  enforced  unless  private 
business  establishments  are  to  be  regarded  as 
state  institutions.  In  a  state  factory,  wages  may 
possibly  be  determined  by  law,  but  not  in  open 
competitive  business  conditions,  where  the  sup- 
ply of  labor  has  as  much  influence  on  wages  as  the 
demand.  If  the  supply  of  women  wage-earners 
converges  on  only  certain  kinds  of  work,  wages 
will  be  lowered  by  the  very  large  supply  of  the 
workers.  There  is  no  exit  by  this  door  of  legal 
enactment  as  to  the  amount  of  wages. 

The  true  and  immediate  remedy  is  the  creation 
of  ready  means  by  which  the  industrial  capacity 
of  the  wage-earning  women  will  be  increased. 
The  wrong  situation — of  which  low  wages,  pos- 
sible starvation,  and  the  temptation  to  vice  are 
only  symptoms — is  due  primarily  to  the  fact  that 
women  thrown  on  their  own  resources  know  no 
trade  and  crowd  each  other  in  the  market  for  un- 
skilled labor.  The  remedy  lies  in  the  creation  of 
places  of  instruction  where  any  woman  (no  mat- 
ter how  poor)  shall  be  taught  a  trade  and  have 
skill  given  her  by  which  she  can  obtain  a  living 
wage.  The  remedy  lies  hi  preventing  a  congestion 
of  unskilled  feminine  labor  by  industrial  educa- 

259 


LATTER-DAY  PROBLEMS 

tion.  There  is  no  other  rational  or  permanent  or 
human  way  out  of  the  present  wretched  situation, 
if  we  have  the  real  interest  of  the  workers  at  heart 
— and  are  not  interested  chiefly  in  getting  some 
cheap  political  notoriety. 

This  conclusion  applies  to  men  as  well  as  to 
women.  Is  not  a  skilled  carpenter  worth  more 
than  a  blunderer?  In  any  business,  does  not 
every  one  agree  that  it  is  fair  to  give  a  very  en- 
ergetic, live,  active,  skilful  salesman  more  than 
a  stupid?  If  he  is  skilled  he  earns  more  because 
he  brings  in  more  business.  That  being  settled, 
we  do  not  fix  his  wages  on  what  it  costs  him  to 
live.  He  has  a  right  to  spend  his  income  as  he 
pleases.  Hence,  if  we  were  to  adopt  the  theory 
of  the  minimum  wage  we  should  be  adopting  a 
new  theory  of  wages,  which  would  justify  the  re- 
fusal to  pay  higher  wages  based  on  efficiency. 

We  find  unions  basing  action  on  adherence  to 
the  law  of  "artificial  monopoly"  of  labor.  It 
never  has  worked  rightly,  it  never  can  work  right- 
ly, for  the  true  interests  of  labor.  Finding  dif- 
ficulties always  ahead,  the  loyal  unionists  fight  the 
harder;  implicitly  believing  that  their  principles 
must  be  right,  they  begin  to  create  a  code  of 
ethics  which  places  loyalty  to  the  union  above 

260 


MONOPOLY  OF  LABOR 

loyalty  to  the  state.  That  mere  fact  ought  to 
cause  reflection.  Is  it  possible  that  the  whole  de- 
velopment of  liberty  under  constitutionalism  for 
centuries  has  been  a  mistake  and  that  only  the  re- 
cent theories  of  unions  are  worthy  of  obedience? 
It  would  be  wiser  to  study  further  and  see  if  the 
progress  of  labor  upward  may  not  be  consonant 
with  the  progress  of  liberty  under  law.  Direct 
conflict  with  the  state  can  have  but  one  result  for 
unions.  To  force  the  false  theory  of  "artificial 
monopoly"  of  labor  against  the  bulwarks  of  civi- 
lized society  would  be  like  sending  a  derailed  lo- 
comotive at  full  speed  down  a  crowded  city 
street:  it  may  destroy  and  maim  others,  but  the 
end  is  ruin  for  the  engine. 

I  once  heard  Phillips  Brooks  urge  in  a  sermon 
that  "a  man  does  not  have  a  right  to  all  his 
rights,"  legal  or  moral.  He  may  be  able  to  enforce 
them  if  he  wishes;  but,  as  human  nature  goes,  it 
is  better  not  to  expect  the  last  scrap  of  what  is 
due.  It  is  good  for  the  successful  man  to  feel  that 
he  has  a  large  responsibility  to  the  less  successful. 
Those  who  are  climbing  up  without  looking  around 
would  do  well  to  take  in  the  world  about  them, 
and  the?.r  relations  to  others,  as  they  begin  to 
reach  the  top.  It  is  they  who  should  do  the  most 

261 


LATTER-DAY  PROBLEMS 

to  assuage  the  bitterness  of  unsuccess,  no  matter 
if  discontent  is  unreasoning.  It  is  they  who  must 
temper  the  wind  to  the  shorn  lamb  in  the  great 
world  of  industry.  Men  do  not  want  charity. 
The  task  is  to  create  conditions  where  men  by 
self-help  can  work  out  their  own  salvation  and 
make  charity  unnecessary. 

The  key  to  the  problem  so  far  as  it  concerns 
labor  is  the  principle  of  superiority  due  to  "nat- 
ural monopoly."  The  only  real  permanent  aid  to 
low  wages  is  to  increase  the  productivity  and  skill 
of  the  persons  at  the  bottom.  Instead  of  talking 
of  such  injurious  palliatives  as  minimum  wages, 
create  institutions  at  once  where  those  persons 
can  be  given  a  trade  or  training  for  a  gainful  occu- 
pation. The  cry  for  a  minimum  wage  is  evidence 
of  the  industrial  incapacity,  the  lack  of  producing 
power,  in  masses  of  our  people.  The  concrete 
ways  of  increasing  the  productive  power  of  each 
man  and  woman  are  not  unknown.  Moreover, 
the  captain  of  industry  who  does  not  "have  a 
right  to  all  his  rights  "  can  introduce  into  his  shops 
carefully  worked-out  plans  for  helping  his  opera- 
tives to  rise  in  life;  to  better  conditions  by  wel- 
fare work;  to  encourage  savings  and  thrift;  to  in- 
troduce the  stimulus  of  profit-sharing;  and,  above 

262 


MONOPOLY  OF  LABOR 

all,  establish  civil-service  methods  devised  to  pick 
out  and  promote  the  promising  youth  so  that  the 
path  from  the  bottom  to  the  top  is  open  to  every 
employee.  Under  unrestricted  competition  there 
will  be  seen  the  inevitable  results  of  "natural  mo- 
nopoly "  by  which  superiority  comes  to  its  own 
and  wages  are  in  some  proportion  to  productive 
power.  Thus  organization  may  be  used  to  for- 
ward merit;  and  our  individualistic  democracy 
may  found  its  material  development  on  the  satis- 
factory basis  of  correct  economic  principles. 


263 


CHAPTER  X 
CAPITALISM  AND   SOCIAL  DISCONTENT 


IN  these  days  when  capital  is  being  destroyed 
on  an  enormous  scale  in  the  European  war, 
some  fundamental  ideas  are  gaming  recognition 
by  the  mere  logic  of  events  which  in  the  piping 
times  of  peace  would  have  taken  great  pedagog- 
ical effort  and  much  time  to  enforce.  It  is  as- 
sumed as  a  matter  of  course  that  this  frightful 
diversion  of  capital  from  the  normal  industries 
of  a  country  to  the  making  of  munitions  of  war 
and  to  the  maintenance  of  soldiers — the  whole  of 
whose  operations  leave  no  wealth  in  the  place  of 
that  consumed — is  removing  countless  men  from 
peaceful  industrial  employment.  Unconsciously, 
the  upheaval  of  industry  in  the  belligerent  coun- 
tries is  tied  up  in  every  one's  mind  with  specula- 
tions as  to  the  diminution  in  the  supply  of  capital 
now  and  in  the  immediate  future  after  the  end  of 
the  war.  Will  the  rate  of  interest  go  up?  Upon 

264 


CAPITALISM  AND   SOCIAL  DISCONTENT 

whom  will  the  burden  of  taxation  fall  to  support 
the  great  national  debts?  From  what  source  will 
South  America  and  other  undeveloped  lands  now 
gain  the  supplies  of  capital  upon  which  they  have 
depended  in  the  past  for  their  normal  growth? 
Europe  is  now  destroying  capital.  Will  it  be  able 
to  provide  it  out  of  new  supplies  to  needy  coun- 
tries as  before?  Are  not  the  industries  and  the 
working  forces  of  the  world  in  for  contraction 
until  the  losses  of  capital  are  again  made  up? 
And  yet  these  industrial  forces  are  everywhere 
joining  in  the  support  of  the  abnormal  national 
egotisms,  which  demand  satisfaction  to  their 
"honor"  by  gigantic  destruction  of  capital  hi  the 
deadlocks  of  war,  killing  off  the  pick  of  the*  labor 
force,  creating  domestic  sorrow  in  every  household, 
and  checking  employment  for  the  future.  The 
fundamental  problems  for  the  laboring  men,  how- 
ever, will  not  only  remain,  but  their  pressing  im- 
portance will  be  intensified  by  all  that  is  happen- 
ing in  the  war. 

ii 

In  facing  the  nature  and  functions  of  capital,  we 
are  also  obliged  to  face  the  ideas  lying  back  of  the 
term  "capitalism";  to  realize  that  for  good  or 

265 


LATTER-DAY  PROBLEMS 

for  ill  a  feeling  of  antagonism  has  grown  up 
between  employers  and  employed  in  bargaining 
about  wages;  to  note  that  an  opposition  of  in- 
terests has  been  formulated  in  the  phrase  of  "a 
warfare  between  capital  and  labor";  and  to  un- 
derstand that,  as  a  consequence,  a  class  conscious- 
ness has  been  developed  and  encouraged  as  a 
means  of  emphasizing  the  claims  of  the  employed 
against  those  of  the  employers.  All  these  con- 
cepts are  strongly  rooted,  and  they  are  watered 
and  tended  by  eager  enthusiasm  and  sincere  con- 
viction on  the  part  of  legions  of  our  people.  In 
some  way  the  belief  has  won  a  wide  support  that 
the  empty-handed  young  workman  is,  and  must 
remain,  outside  the  sacred  precincts  of  industrial 
success  because  he  is  denied  the  hope  and  pos- 
session of  capital.  Or,  as  it  was  expressed  by  an 
intelligent  student:  "What  hope  is  there,  under 
the  present  industrial  system,  for  the  disfran- 
chised classes?"  No  doubt,  the  supposition  that 
the  laboring  force  is  practically  cut  off  from  the 
possession  and  advantages  of  capital  is  the  basis 
for  the  fundamental  tenet  of  socialism  that  the 
state  should  control  all  capitalistic  instruments 
of  production  in  the  common  interest. 
In  primitive,  tribal  society  (there  never  having 
266 


CAPITALISM  AND  SOCIAL  DISCONTENT 

been,  in  fact,  any  Crusoe  economy)  men  faced  na- 
ture, in  the  struggle  to  obtain  satisfaction  for 
primary  wants,  with  few  but  the  simplest  forms 
of  capital  to  add  to  the  efficiency  of  labor.  The 
two  elemental  factors  of  production  were  men 
and  the  resources  of  nature.  There  was  that, 
however,  in  the  make-up  of  man  which  constantly 
set  a  premium  on  devising  means  and  implements 
to  increase  his  power  over  nature.  Moreover, 
there  was  that  hi  the  very  constitution  of  nature 
which  ever  yielded  to  productive  effort  a  surplus 
over  maintenance  and  outlay  which  afforded  a 
margin  for  saving.  Thus  there  were  brought  into 
existence  various  and  new  forms  of  capital  used 
to  aid  in  increasing  the  products  needed  by  man. 
Capital  sprang  out  of  the  mental  and  psychic 
powers  of  man.  Out  of  the  devising  and  inven- 
tive mind  of  man  the  state  of  the  arts  began  to 
change;  and  out  of  the  psychic  processes  by 
which  a  future  gain  proved  greater  than  a  present 
indulgence  capital  came  into  existence  by  saving 
and  was  able  to  turn  itself  into  constantly  more 
and  more  efficient  instruments  as  the  arts  and 
civilization  developed  and  thus  became  the  ally 
of  man  against  nature.  In  fact,  only  as  both 
science  and  capital  grew  were  men  able  to  ob- 

267 


LATTER-DAY  PROBLEMS 

tain  increasing  satisfactions.  Hence,  the  volume 
of  production  gave  a  fairly  good  register  of  the 
efficiency  of  labor  and  capital  in  the  conquest 
over  nature. 

The  evolution  of  capitalistic  forms  has  gone 
on  since  early  times  almost  in  geometrical  pro- 
gression, until  we  have  reached  the  amazing  vari- 
ety and  efficiency  of  those  of  the  present  day. 
Since  capital  economized  the  effort  of  man  (as  in 
the  case  of  a  lever,  or  a  bullock  cart)  it  left  him 
more  time  free  to  work  on  still  more  effective  in- 
struments, thus  in  later  periods  enormously  in- 
creasing his  former  power.  Moreover,  as  this 
process  enlarged  the  margin  above  his  primary 
wants  it  allowed  him  either  (i)  more  consump- 
tion, or  (2)  more  goods  than  before  to  be  stored 
up  for  accumulating  power  over  future  and  dis- 
tant ends.  Here  at  once  came  a  test  of  men's 
character  in  choosing  between  the  desire  for  pres- 
ent consumption  (without  a  productive  return) 
and  abstention  for  a  future  gain.  In  a  time  of 
only  rude  forms  of  primitive  capital  the  surplus 
left  for  savings  was  but  small;  and,  in  addition y 
the  prevailing  violence  of  the  times  gave  little 
security  to  what  was  saved.  But  capital  grew 
more  rapidly  as  capitalistic  forms  increased.  It 

268 


CAPITALISM  AND  SOCIAL  DISCONTENT 

is  sometimes  asserted  that  those  of  small  incomes 
have  no  margin  from  which  capital  can  be  saved. 
The  mere  fact  of  the  steady  and  marvellous  growth 
of  capital  out  of  meagre,  primitive  resources  as  the 
race  has  developed  is  the  final  answer  to  any  such 
claim.  As  a  measure  of  man's  devising  mind  and 
his  success  hi  taming  nature  to  his  uses,  capital 
has  become  an  essential  and  powerful  agent  in 
production,  separable  from  labor,  exchangeable 
among  men  by  loans,  practically  unlimited  in 
supply,  except  as  it  may  be  limited  by  the  saving 
propensities  of  mankind  and  by  the  materials 
(e.  g.,  wood  and  iron)  out  of  which  the  concrete 
forms  of  capital  can  be  made.  Indeed,  modern 
civilization,  the  every-day  present  well-being  of 
the  race,  would  be  wholly  impossible  without  the 
efficient  aids  which  man  has  already  created  in 
the  multifarious  forms  of  capital. 

The  differentiation  and  extension  of  men's 
wants  and  their  satisfaction  have  gone  on,  how- 
ever, pari  passu  with,  and  have  been  limited  by, 
two  things:  (i)  the  growth  of  science  and  the 
arts,  and  (2)  the  growth  of  capital.  Primitive 
capital  took  the  form  of  spears,  bows  and  arrows, 
clubs,  axes,  hammers,  cooking-utensils,  canoes, 
ploughs,  huts,  cattle,  and  domestic  beasts  of  bur- 

269 


LATTER-DAY  PROBLEMS 

den.  These  forms  of  capital  were  all  of  crude 
construction.  Later  came  ships  for  transporta- 
tion of  goods.  The  windmill  came  into  use  only 
in  the  Middle  Ages  as  an  improvement  on  the 
ancient  water-mill.  But  for  thousands  of  years 
the  tools  of  men  remained  much  of  the  same  char- 
acter; they  passed  out  of  this  condition  only  by 
the  help  of  scientific  discovery.  The  new  era  did 
not  begin  until  the  application  of  steam  and 
water  power  to  industry  was  made  in  England 
in  the  eighteenth  century.  Only  in  the  nine- 
teenth century  was  the  steamship  developed;  and 
it  is  now  the  chief  aid  in  fishing,  which  was  once 
carried  on  by  the  primitive  canoe.  Indeed,  eco- 
nomic history  is  nothing  more  or  less  than  a  his- 
tory of  the  conquest  of  nature  made  possible  by 
the  increase  of  capital  and  by  the  extension  of 
applied  science.  It  is  a  history  of  marvels. 

Capital  serves  to  discount  long-continued  proc- 
esses of  production.  Since  we  can  obtain  more 
goods  by  the  aid  of  capital  than  without,  we  move 
forward,  by  inventions  touching  specialized  proc- 
esses, to  adopt  methods  absolutely  impossible 
without  more  or  less  durable  forms  of  capital. 
Thus  satisfactions  which  meet  varied  wants  be- 
come more  abundant  and  cheaper  only  as  indus- 

270 


CAPITALISM  AND  SOCIAL  DISCONTENT 

try  is  able  to  use  more  and  more  capital — that  is, 
only  as  production  becomes  more  capitalistic. 
The  only  limit  to  this  development,  as  has  been 
said,  is  the  self-control  and  ingenuity  of  the  hu- 
man mind.  Hence,  not  only  does  capital  change 
the  relation  of  man  to  his  environment  and  to  his 
ability  to  satisfy  increasing  wants,  but  it  enables 
him  to  create  a  system  of  industry  involving  an 
extensive  quality  of  co-operation  and  division  of 
labor  (as  against  primitive  individualism),  which 
would  be  wholly  impossible  without  it.  This  is 
the  outcome  of  capitalism. 

in 

We  therefore  come  to  see  capitalism  as  a  highly 
beneficent  influence  in  the  economic  world.  It 
has  enlarged  the  comfort  and  range  of  consump- 
tion of  the  poorest  toiler  on  the  earth.  That 
truth  is  unmistakable.  Then  why  is  it  that  in 
the  labor  literature  of  our  day  "capitalism"  is 
used  as  a  term  of  reproach,  or  objurgation? 
What  really  resides  in  the  hopeless  lament  that 
the  laboring  classes  are,  in  respect  of  capital, 
"disfranchised"? 

Capitalism  probably  has  the  connotation  in 
the  minds  of  those  who  thus  express  themselves 

271 


LATTER-DAY  PROBLEMS 

that  it  is  responsible  for  the  separation  of  man- 
kind into  employers  and  employees,  into  masters 
and  servants.  Why  is  it  that  in  the  world  of  in- 
dustry some  men  are  employers  and  some  are 
employed?  To  some  of  those  who  have  lately 
come  from  nations  having  privileged  classes, 
where  many  are  born  to  wealth  without  effort  of 
their  own,  it  may  seem  that  all  capital  is  unjustly 
owned  by  its  possessors.  But  apart  from  inheri- 
tance, gifts  by  privilege,  and  robbery,  the  enor- 
mous mass  of  modern  industrial  capital  has  come 
into  existence  by  a  personal  process  of  saving,  by 
abstention  from  personal  consumption  in  order 
to  get  it  for  productive  uses.  Thus  the  origin  of 
capital  has  both  a  psychic  and  a  physical  element. 
And  saving,  consequently,  depends  upon  two 
separate  and  unlike  forces:  (i)  the  strength  of 
the  desire  to  save,  the  power  to  realize  the  future, 
or,  as  it  has  been  termed,  "the  effective  desire  of 
accumulation";  and  (2)  the  extent  of  the  mar- 
gin of  income  over  the  necessaries  of  life,  or  the 
amount  of  wealth  from  which  savings  can  be 
made.  Given  a  strong  desire  to  save,  the  amount 
of  capital  accumulated  will  vary  with  the  margin 
from  which  savings  can  be  made;  or,  given  the 
margin,  large  or  small,  the  amount  saved  will 

272 


CAPITALISM  AND   SOCIAL  DISCONTENT 

vary  with  the  ability  to  realize  the  future.  Any- 
thing, therefore,  which  will  increase  the  power  of 
the  future  over  the  present  will,  other  things 
being  equal,  increase  the  amount  of  capital. 

The  creation  and  legitimate  possession  of  capi- 
tal, consequently,  requires  certain  personal  quali- 
ties— willingness  and  imagination  enough  to  weigh 
a  future  gain  over  against  a  present  indulgence, 
self-control,  patience,  persistence,  foresight,  and 
prudence.  Those  who  have  these  homely  virtues 
become  the  possessors  of  capital,  and  hence  em- 
ployers of  others;  and  those  who  have  them  not, 
who  own  no  capital,  must  seek  those  who  have 
capital,  and  hence  are  employed  by  others.  The 
separation  into  the  two  great  classes  of  the  em- 
ployers and  the  employed  is  thus  due  to  differ- 
ences in  human  qualities;  but  differences  of  a 
kind  which  can  be  removed  by  training,  environ- 
ment, and  the  development  of  character  and  civili- 
zation. And,  conversely,  the  existing  wage  sys- 
tem is  likely  to  remain  as  long  as  certain  elements 
of  human  nature  remain  what  they  are.  More- 
over, may  it  not  be  a  beneficent  order  of  things 
by  which  material  success — which  appeals  strongly 
to  many  who  are  deaf  to  ordinary  moral  and  re- 
ligious appeals — is  set  forth  as  a  reward  for  the 

273 


LATTER-DAY  PROBLEMS 

exercise  of  many  of  the  simplest  virtues?  In- 
deed, one  of  the  fundamental  weaknesses  of  Social- 
ism is  that  it  promises  to  its  votaries  the  posses- 
sion of  capital  through  the  action  of  the  state, 
without  any  personal  sacrifice  on  their  part  and 
by  removing  the  very  stimulus  to  character  and 
virtue  laid  upon  them  by  the  existing  system  of 
society — more  or  less  faulty  though  that  system 
may  be  in  other  ways. 

IV 

We  are  logically  forced  to  the  conclusion,  there- 
fore, that  there  is  no  limit  to  the  supply  of  this 
immensely  powerful  and  necessary  factor,  capi- 
tal, except  the  total  increase  of  wealth  over  main- 
tenance, and  the  willingness  to  save.  There  is, 
then,  no  possible  monopoly  in  capital.  By  the 
spread  of  intelligence  and  science  the  total  wealth 
from  which  savings  can  be  made  is  increasing, 
precisely  because  new  forms  of  capital  are  being 
constantly  devised  which  are  ever  enlarging  the 
productive  forces  of  mankind.  To  this  process 
there  is  no  end.  There  is,  also,  no  monopoly  of 
the  powers  of  men  to  labor  or  to  postpone  con- 
sumption. It  is  a  matter  to  be  decided  only  by 
the  individual  himself.  He  is  not  restrained  or 

274 


CAPITALISM  AND  SOCIAL  DISCONTENT 

"disfranchised"  by  any  power  outside  himself. 
If  a  young  man  with  limited  skill  and  intelligence 
ignorantly  marries  without  having  saved  any- 
thing and  immediately  begets  a  large  family  of 
children,  of  course  he  finds  it  hard  to  save  on  a 
very  small  income;  and  hence  he  may  regard 
the  man  who  has  already  accumulated  capital  as 
a  monopolist  to  whom  he  must  go  for  employ- 
ment. The  situation,  however,  is  one  of  the  labor- 
er's own  creating;  the  fault  is  not  in  the  existing 
system  of  society,  nor  in  any  limitation  to  capi- 
tal, since  capital  can  be  saved  by  any  one  who  is 
willing  to  comply  with  the  rules  of  the  game  set 
by  the  character  of  human  nature  and  our  ex- 
ternal environment.  In  short,  the  improvement 
of  the  position  of  the  poorer  laborer  is  largely 
dependent  on  internal  ethical  growth  and  self- 
control.  The  remedy  is,  in  the  main,  not  social 
but  personal;  social  in  so  far  as  the  institutions 
of  society  create  means  by  which  the  individual 
gains  in  character. 

Such  being  the  essential  reasons  why  some  men 
are  employers  and  others  are  employed,  why 
some  men  have  capital  and  others  not,  the  very 
natural  ambition  of  those  who  have  meagre  in- 
comes to  enlarge  them  has  created  what  we  have 

275 


LATTER-DAY  PROBLEMS 

come  to  describe  as  "social  discontent."  It  would 
be  very  unfortunate  if  those  having  little  did 
not  wish  to  have  more  of  this  world's  goods,  hi 
order  that  they  may  be  freed  from  the  deadening 
effects  of  monotonous  labor  without  the  hope  of 
a  decent  and  cheerful  environment.  Therefore, 
"social  discontent"  is  not  a  thing  to  be  decried, 
but  a  thing  which,  if  it  did  not  exist,  we  should 
wish  to  create  and  stimulate  as  a  means  of  estab- 
lishing the  needed  motive  for  progress  hi  those 
who  sometimes  have  no  ambition  and  think  they 
are  "disfranchised"  (hi  the  industrial  sense). 
Thus  given  the  motive,  how  may  we  state  the 
means  to  the  given  end?  We  are  all  agreed  in 
wishing  larger  incomes  for  those  in  the  harder 
walks  of  the  unskilled;  but  the  really  difficult 
thing  is  to  come  to  an  agreement  upon  the  means 
of  reaching  the  end  desired  by  us  all. 

In  this  field  of  practical  proposals  we  find  a 
confusion  of  tongues,  a  pathetic  mixture  of  lofty 
purpose  and  emotional  incompetence,  absolute 
confidence  combined  with  rigid  prejudices,  grasp- 
ing for  power  over  industrial  organizations  unac- 
companied by  a  moral  sense — some  of  it  more 
or  less  honest  and  sincere,  but  weakened  by  the 
fact  that,  hi  the  long  run,  no  real  progress 

276 


CAPITALISM  AND  SOCIAL  DISCONTENT 

is  to  be  gained  through  proposals  which  are 
not  based  on  fundamental  economic  principles. 
To  ignore  these  principles  is  to  court  failure. 
The  pity  is  that  in  the  labor  world  methods  for 
raising  incomes  are  adopted  which  lead  straight 
to  an  impasse;  but  they  are  the  more  persis- 
tently fought  for,  the  more  difficulties  they  en- 
counter. In  the  stubborn  fight  for  what  are  be- 
lieved to  be  rights,  when  no  headway  is  made, 
ordinary  methods  of  constitutional  agitation,  ac- 
cepted codes  of  morals,  are  thrown  to  the  winds, 
and  new  codes  of  political  and  ethical  principles 
are  set  up  to  support  impossible  demands.  If 
it  were  once  understood  that  the  problem  is  one 
of  means  and  not  of  ends  (to  which  ends  most 
men  would  assent),  and  that  possibly  those  means 
are  not  the  best  suited  to  gain  the  desired  ends 
which  stir  up  insuperable  antagonisms,  we  might 
be  led  to  hunt  for  other  and  easier  ways  of  reach- 
ing the  same  result. 

v 

Perhaps  the  one  instrumentality  for  increasing 
the  shares  of  working  men  which  has  become 
sacrosanct  in  the  labor  world  is  the  union.  Is  this 
a  means  likely  to  accomplish  the  desired  end? 

277 


LATTER-DAY  PROBLEMS 

Let  us  examine  this  means  dispassionately,  and 
solely  with  the  aim  of  testing  its  probable  efficacy 
for  raising  the  standard  of  living,  and  for  increas- 
ing the  consumption,  comfort,  and  enjoyment  of 
the  lower  range  of  laborers. 

The  laborers  are  urged  to  regard  "trade  unions 
as  the  means  through  which  to  work  out  their 
economic  salvation/'1  Not  only  are  unions  to 
provide  "just  wages/'  but  to  bring  about  an 
equitable  distribution  of  wealth: 

Trade-unionism  stands  for  the  constructive  develop- 
ment of  society,  it  seeks  the  more  equitable  distribution 
of  wealth  in  order  that  all  our  people  may  develop  to  the 
extent  of  their  highest  and  best  possibilities.2 

To  such  an  extent  has  the  enthusiast  gone  in 
insisting  on  the  union  as  the  one  agent  at  hand 
for  bringing  about  a  rise  of  wages  and  the  prog- 
ress upward  of  the  laboring  classes  that  his  vi- 
sion is  obscured  for  any  other  means — and  this 
mainly  on  the  ground  that  the  union  is  the  only 
practical  means  by  which  to  reform  an  inequi- 
table system  of  distribution.  Tremendous  energy 
has  been  put  into  the  cause  of  unionism  in  this 

1  John  Mitchell,  "The  Economic  Necessity  of  Trade-Union- 
ism,"  Atlantic  Monthly,  February,  1914,  p.  170. 

2  Ibid.,  p.  169. 

278 


CAPITALISM  AND  ASOCIAL  DISCONTENT 

behalf.  That  unions  have  an  important  place  in 
our  economic  life  no  one  doubts;  but  to  suppose 
that  the  union  is  the  solution  of  the  problem  of 
equitable  distribution  no  one,  in  his  economic 
senses,  believes.1 

Elsewhere  I  have  tried  to  emphasize  the  point- 
not  new  by  any  means — that  unions  are  charac- 
terized by  the  basic  principle  of  monopoly  of 
labor.2  Their  whole  economic  purpose  is  to  try 
to  raise  wages  at  a  given  time  and  place  by  lim- 
iting the  supply  of  labor  obtainable  by  employ- 
ers. To  this  it  has  been  replied  that  "a  labor 
union  is  not  a  combination  or  conspiracy  in  re- 
straint of  trade";  that  no  decision  of  the  courts 
has  declared  that,  under  the  anti-trust  act,  an 

1  My  own  position  has  been  misrepresented.    The  unions, 
of  course,  have  a  perfectly  legitimate  function  in  collective 
bargaining.    Nor  is  it  true  that  I  have  declared  that  the 
courts  hold  that  working  men  have  no  legal  right  to  organize. 
On  the  contrary,  they  have  as  much  right  to  organize  as  any 
other  body  of  citizens  for  any  lawful  purpose.   The  morality 
of  a  union  is  like  that  of  a  gun;   in  itself  it  is  neither  moral 
nor  unmoral;   it  depends  solely  on  what  use  it  is  put  to  by 
those  who  control  it.     In  approving  of  labor  organizations 
it  is  not  necessary  to  believe  that  everything  done  by  a  union 
is  right  and  moral.     A  union  that  blows  up  people  they  do 
not  like  with  dynamite  is  no  more  right  or  legal  than  Ken- 
tucky night-riders  who  burn  other  persons*  tobacco-barns. 

2  Supra,  chapter  IX. 

279 


LATTER-DAY  PROBLEMS 

organization  of  workmen  "is  an  unlawful  monop- 
oly." Of  course  not;  nor  is  any  lawful  organiza- 
tion. The  real  point  at  issue  is:  Does  this  or  that 
particular  combination  of  laborers  commit  acts 
in  restraint  of  trade?  If  it  does,  it  comes  under 
the  penalties  of  the  act,  as  in  the  case  of  the  Dan- 
bury  hatters. 

Moreover,  in  reply  to  the  truism  that  unions 
are  based  on  the  principle  of  monopoly,  a  some- 
what irrelevant  reply1  is  given  that  a  distinction 
should  be  made  between  organizations  formed  to 
control  the  prices  of  commodities  such  as  the 
necessities  of  life  (referring,  of  course,  to  the  so- 
called  trusts),  and  those  "formed  for  the  purpose 
of  defending  and  promoting  the  interests  of  the 
wage-earners"  (meaning,  of  course,  labor  unions). 
This  is  obviously  an  appeal  to  the  feeling  of  hu- 
manity which  should  not  regard  human  beings  as 
if  they  were  inanimate  goods.  Of  course  labor 
stands  in  a  different  category  from  goods,  and  the 
conditions  affecting  their  supply  are  entirely  dif- 
ferent: on  that  we  are  all  agreed.  But  that  dis- 
tinction is  irrelevant  to  the  point  at  issue.  There 
are  organizations  of  men  known  as  producers 
"for  the  purpose  of  defending  and  promoting 
1  John  Mitchell,  he.  cit.,  p.  164. 
280 


CAPITALISM  AND  SOCIAL  DISCONTENT 

their  interests,"  and  there  are  organizations  of 
men  known  as  laborers  "for  the  purpose  of  de- 
fending and  promoting  their  interests."  Both 
are  organizations  of  men,  and  both  are  subject 
to  the  same  law  regulating  the  actions  of  men,  if 
either  should  attempt  to  restrain  trade.  It  is 
sophistical  to  speak  as  if  one  group  were  affected 
by  law  and  the  other  not. 

This  sophistical  reasoning  goes  further.  It  is 
claimed  that  the  anti-trust  act  was  never  in- 
tended to  apply  to  organizations  having  no  capi- 
tal stock,  not  dealing  in  products  of  labor,  and 
not  organized  for  a  profit.  It  can  make  no  more 
difference  whether  an  organization  violating  the 
law  has  capital  stock  or  not  than  whether  a  vio- 
lator of  the  peace  has  blue  eyes  or  brown  eyes. 
It  can  make  no  difference  what  a  combination 
ostensibly  deals  in  or  whether  its  profits  are  large 
or  small;  the  real  issue  must  always  be:  Has  it 
violated  the  law  of  the  land  ?  Why,  then,  should 
any  one  be  pained  to  find  unions  included  under 
the  provisions  of  the  anti-trust  act?  They  could 
not  be  included  merely  as  organizations,  no  matter 
what  their  purpose,  if  they  did  nothing  objec- 
tionable under  the  law.  If  the  members  of  a 
union  are  proved  to  have  restrained  trade  there 

281 


LATTER-DAY  PROBLEMS 

is  no  reason  under  high  heaven  why  they  should 
not  be  regarded  as  violators  of  the  anti-trust  law 
as  well  as  any  other  persons  or  organizations. 

Since  the  formative  principle  of  a  union  is  a 
restriction  of  employment  to  its  own  members, 
the  attitude  of  labor  leaders  to  it  is  highly  im- 
portant. It  bears  on  the  large  question  of  the 
proper  means  by  which  the  working  men  may 
better  their  position.  This  attitude  is  briefly 
summed  up  as  follows:1 

If  it  eventually  should  be  held  that  labor  unions  as 
such  are  monopolies  in  restraint  of  trade  and  thus  sub- 
ject to  dissolution  by  order  of  the  court,  no  greater  dis- 
aster to  the  orderly,  rational,  and  constructive  develop- 
ment and  progress  of  the  wage-earning  masses  will  have 
occurred. 

Obviously  no  union  whose  acts  are  lawful  is  in 
danger  of  dissolution.  "Trade  unions,"  it  is 
claimed,  "strive  for  peace  based  upon  industrial 
righteousness." 2  The  inference  is  that  what- 
ever, in  the  eyes  of  the  unionists,  is  "industrial 
righteousness,"  whether  forbidden  by  law  or  not, 
should  be  allowed  to  unions, without  danger  of 
dissolution.  Who  is  to  decide  what  it  is?  The 
union  is  to  remain  peaceful,  provided  there  is 

llbid.,  p.  163.  *Ibid.}  p.  162. 

282 


CAPITALISM  AND   SOCIAL  DISCONTENT 

allowed  to  it  what  it  itself  interprets  to  be  "  in- 
dustrial righteousness."  Are  the  unions  that 
dynamited  bridges  and  innocent  compositors  in 
printing-offices,  themselves  passing  judgment  and 
executing  orders  of  life  and  death,  to  be  the  arbi- 
ters of  industrial  righteousness  as  the  price  of 
peace? 

Quite  apart  from  the  abuses  of  union  organiza- 
tion (which  are,  of  course,  separable  from  the  legit- 
imate services  of  unions),  the  economic  function 
of  the  union  is  what  most  concerns  us.  Taking 
it  at  its  best,  can  it  produce  the  results  claimed 
for  it? 

As  has  been  said,  the  essential  principle  of  it  is 
the  monopoly  of  labor.  It  can  accomplish  its 
aim  of  raising  the  wages  of  its  members  only  by 
the  limitation  of  competitors.  The  basis  of  its 
existence  is  its  recognition  of  the  doctrines  of  de- 
mand and  supply;  to  increase  price  by  a  limita- 
tion of  supply.  If  the  whole  supply  of  labor  were 
under  control,  then  the  union  could  produce  a 
complete  monopoly  and  fix  price;  but  since  this 
is,  humanly  speaking,  impracticable,  there  can 
be  attempts  at  fixing  price  only  by  artificial  mo- 
nopoly. The  reason  of  this  failure  to  function 
as  a  perfect  monopoly  is  obvious.  The  supply 

283 


LATTER-DAY  PROBLEMS 

of  labor  through  births  cannot  be  controlled  by 
unions,  as  now  conducted.  If  the  supply  of  work- 
ers is  certain  to  come  forward  for  physiological 
reasons  quite  irrespective  of  union  policy,  it  is 
useless  to  assume  any  power  by  unions  to  fix 
prices  of  labor  through  control  of  supply.  And 
yet  that  is  the  central  theory  of  unionism. 

To  point  this  out  does  not  hi  the  least  imply 
any  antagonism  to  the  interests  of  labor.  No 
one  is  an  enemy  of  labor  who  attempts  to  study 
and  depict  the  actual  function  of  unions.  If  it 
can  be  pointed  out  wherein  the  union  is  in- 
capable of  accomplishing  all  that  is  blindly 
claimed  for  it,  and  other  means  can  be  suggested 
by  which  the  larger  aims  of  labor  can  be  reached, 
certainly  the  one  who  can  do  that  is  a  better 
friend  of  labor  than  those  who  keep  driving  work- 
men in  a  forlorn  hope  against  an  impossible  wall. 

VI 

Are  unions,  indeed,  the  only  means  at  hand  to 
accomplish  "the  orderly,  rational,  and  construc- 
tive development  and  progress  of  the  wage-earn- 
ing masses"?  The  statement  made  in  John 
Stuart  Mill's  day  still  remains  true,  that  the  ex- 
traordinary progress  made  in  industrial  output 

284 


CAPITALISM  AND  SOCIAL  DISCONTENT 

and  efficiency  of  production  for  many  decades 
has  not  been  accompanied  by  a  corresponding 
enlargement  in  the  income  and  consumption  of 
the  wage-receiving  classes,  because  numbers  have 
increased  as  production  has  advanced,  and  a 
larger  total  dividend  has  been  spread  over  more 
divisors,  giving  to  each  laborer  a  not  much  larger 
quotient  than  before.  If  this  be  true,  the  future 
progress  of  the  laboring  population  depends  upon 
something  more  than  fractional  advances  in  their 
wages.  Is  it  not  beginning  to  dawn  upon  the 
real  friends  of  labor  that  betterment  cannot  be 
permanently  or  even  sensibly  advanced  so  long 
as  men  are  merely  receivers  of  wages  ?  The  union, 
however,  assumes  that  all  depends  upon  the  mat- 
ter of  wages.  And  yet,  looking  back,  can  any 
sympathetic  friend  of  labor  be  satisfied  with  the 
gains  which  the  workers  of  our  race  have  won 
through  the  mere  receipt  of  wages?  Is  it  not 
about  time,  without  giving  up  the  acknowledged 
advantages  of  labor  unions,  to  direct  the  minds  of 
workers  to  larger  and  more  hopeful  visions,  to 
possibilities  which  may  more  nearly  realize  their 
ideals,  to  other  means  of  progress  than  those 
which  have  met  only  obstinate  antagonism?  In 
short,  why  not  study  more  carefully  the  reasons 

285 


LATTER-DAY  PROBLEMS 

why  some  men,  as  already  indicated,  are  the  em- 
ployers and  why  others  are  the  employed? 

The  central  reason  why  the  union  is  not  a  means 
competent  to  solve  the  problem  of  an  inequitable 
system  of  distribution  is  that  it  confines  its  at- 
tempts to  control  the  price  of  labor  to  a  means  of 
controlling  supply  which  is  really  illusory.  More- 
over, the  price  of  anything  is  also  affected  by 
whatever  touches  the  demand  for  it.  The  thing 
to  be  acquired  must  have  such  qualities  as  will 
excite  in  the  demander  a  belief  that  it  will  satisfy 
his  need.  Granting  the  need,  and  the  ability  to 
pay,  the  price  will  be  affected  by  the  utility  of 
the  article  to  be  marketed.  Other  things  being 
equal,  the  greater  the  efficiency  or  utility  of  labor 
the  greater  the  demand  for  it.  This  is  one  reason 
why  skilled  labor  may  command  higher  wages 
than  unskilled.  Does  the  union  aim  to  develop 
efficiency  and  utility  hi  labor,  in  order  to  obtain 
higher  wages?  Evidently  not:  another  instance 
in  which  the  union,  as  usually  guided,  does  not 
conform  to  general  principles  which  will  perma- 
nently affect  the  shares  going  to  labor. 

Another  economic  difficulty  has  been  blinked 
by  those  who  rest  their  hopes  alone  on  wages,  and 
try  to  connect  the  wages  to  be  paid  with  the  value 

286 


CAPITALISM  AND  SOCIAL  DISCONTENT 

of  the  product  turned  out.  Even  some  respecta- 
ble authorities  fail  to  see  that  two  separate  proc- 
esses of  valuation  are  going  on,  each  independent 
of  the  other,  both  in  time  and  in  conditions  of 
demand  and  supply.  The  bargaining  for  wages 
to  workmen  goes  on  at  a  time  before  the  goods 
on  which  they  are  working  have  been  produced; 
and  labor  leaders  are  right  who  insist  that  the 
supply  of  labor  and  the  demand  for  it  are  affected 
by  all  that  characterizes  human  beings  on  the 
one  hand  as  distinct  from  those  that  characterize 
inorganic  matter  on  the  other.  The  supply  of 
labor  comes  forward  as  a  result  of  the  strongest 
instinct  in  human  beings;  and  the  demand  for 
labor  can  come  only  from  those  who  can  pay  for 
it  (i.  e.,  with  funds  saved).  On  the  other  hand, 
the  finished  product  is  priced  at  a  time  after  the 
bargaining  for  labor  has  been  settled;  and  the 
supply  of  goods  comes  forward  in  answer  to  an 
offer  of  purchasing  power,  and  under  conditions 
influenced  by  efficiency  of  production,  the  condi- 
tion of  the  arts,  inventions,  division  of  labor,  and 
the  like.  The  price-making  process,  therefore,  is 
clearly  distinct  in  time  and  conditions  for  labor 
on  the  one  hand  and  goods  on  the  other.  The 
obvious  conclusion  from  this  admitted  fact,  then, 

287 


LATTER-DAY  PROBLEMS 

is  that  methods  of  raising  wages  must  be  of  a  kind 
to  affect  the  pricing  of  labor  and  are  more  or  less 
remote  from  those  affecting  the  pricing  of  goods. 
We  find  here  the  fundamental  reason  why  ab- 
stract economic  theories  connecting  the  amount 
of  wages  paid  with  the  value  of  the  product  have 
proved  quite  inevitably  barren. 

vn 

If  we  are  obliged  to  conclude  that  unionism  is 
not  likely  to  change  the  existing  system  of  dis- 
tribution, is  there  any  other  agency  that  will  do 
it?  Will  socialism  do  it? 

As  we  have  seen,  the  pith  of  socialism  resides 
in  the  collective  ownership  by  the  state  of  more 
or  less  of  the  capitalistic  aids  to  production.  Re- 
cent socialistic  writers,  like  Spargo,  say  that  it 
is  intended  to  take  over  only  those  forms  of  capi- 
tal that  are  essentially  social  in  character.  It  is 
not,  of  course,  proposed  to  acquire  this  capital  by 
taxes.  Hence,  since  capital  comes  into  existence 
primarily  through  some  individual  action,  col- 
lective ownership  by  the  state — provided  it  can 
really  distinguish  between  what  is  essentially  in- 
dividualistic and  what  is  essentially  social  in  char- 
acter, which  is  very  much  to  be  doubted — can 

288 


CAPITALISM  AND  SOCIAL  DISCONTENT 

only  come  about  by  commandeering  it,  a  military 
word  for  what  between  individuals  is  called  steal- 
ing. For  instance,  if  a  man  after  years  of  painful 
thrift  should  invest  in  a  railway  or  telephone  bond, 
then,  if  the  socialists  came  into  power,  they  would 
commandeer  it,  because  he  had  invested  in  some- 
thing having  a  social  character.  Under  such  con- 
ditions obviously  the  sources  of  capital  for  any 
enterprise  of  a  social  character  would  be  dried  up. 
But  visionaries  protest  that  the  state  should 
buy  all  agencies  of  a  social  character.  Granted: 
whence  will  come  the  funds?  To  purchase  merely 
our  railways  and  telephones  would  require  many 
billions  of  dollars  of  capital;  yet  their  cost  would 
be  only  a  small  fraction  of  that  of  other  "social" 
enterprises  such  as  subways,  coal  mines,  tele- 
graphs, cables,  insurance  companies,  banks,  and 
the  like.  The  sums  needed  would  stagger  even  a 
war-heated  imagination.  There  would  be  created 
in  the  United  States  a  public  debt  greater  than  the 
new  war  debts  of  Europe.  That  is,  without  a  war 
we  could  have  all  the  satisfactions  of  enormous 
war  taxes.  For  what  advantages  should  we  sub- 
mit to  such  burdens  ?  Simply  that  some  charming 
idealists  believe  the  abolition  of  the  competitive 
system — under  which  all  our  present  enormous 

280 


LATTER-DAY  PROBLEMS 

capital  has,  in  fact,  been  saved — would  change 
dear  old  human  nature.  If,  to  be  sure,  men  could 
be  thus  made  perfect,  we  should  be  willing  to  pay 
this  or  any  price. 

What  evidence  have  we  that  socialism  would 
bring  any  of  these  advantages  ?  Nothing  but  the 
assertions  of  those  who  dream  of  perfection.  As 
to  the  ends  set  forth  by  socialism  we  all  agree  in 
desiring  them.  But  how  as  to  the  means  ?  Some 
say  that  the  socialists  submit  a  definite  plan,  and 
that  anything  would  be  better  than  the  present 
system.  In  truth,  the  means  to  the  given  ends 
proposed  by  the  socialists  are  ridiculously  futile. 
They  offer  nothing  but  vague  promises  of  what 
the  state  will  do.  The  only  definite  first  step  pro- 
posed is  the  seizure  of  all  capital  of  a  social  char- 
acter. That  is,  by  taking  away  the  very  incen- 
tives to  individual  saving,  by  which  all  this  capi- 
tal has  been  created,  it  is  seriously  proposed  that 
human  nature  can  thereby  be  changed  to  near- 
perfection.  Such  proposals  are  childish. 

The  world  needs  capital  and  efficient  labor.  It 
must  encourage  both.  So  long  as  there  are  im- 
perfect men  there  will  be  both  evil  employers  and 
evil  workmen.  Capitalism,  as  has  been  shown,  is 
beneficent;  it  is  man  that  is  capable  of  moral 

290 


CAPITALISM  AND  SOCIAL  DISCONTENT 

obliquity.  The  real  problem,  then,  is  to  change 
man.  Make  him  perfect  and  you  will  not  hear 
of  any  demands  for  socialism.  The  social  organ- 
ism must  be  constructed  with  some  regard  to  the 
biological  nature  of  the  animal  to  be  governed  in 
a  social  life.  You  cannot  make  regulations  for 
tigers  as  if  they  were  rabbits. 

When  men  say  the  existing  system  of  distribu- 
tion is  unjust  and  wrong,  therefore  we  must  be- 
come socialists,  they  are  childishly  illogical.  Of 
course  there  are  amazing  inequalities  of  wealth, 
but  it  is  a  non  sequitur  to  argue  that  therefore  we 
should  have  a  share  of  that  wealth.  Independent 
of  fraud,  robbery,  and  graft — which  are  within  the 
reach  of  existing  society — inequalities  of  wealth 
are  due  to  differing  abilities  of  men.  These  differ- 
ences would  not  be  removed  by  merely  changing 
the  form  of  society.  Imagination  and  the  capacity 
to  see  an  opportunity — the  difference  between 
commercial  insight  and  commercial  blindness — in 
the  main  make  economic  opportunity.  The  son 
made  rich  by  inheritance  does  not  long  command 
industrial  power  unless  he  himself  has  industrial 
capacity. 

If,  at  bottom,  socialism  is  based  on  dissatisfac- 
tion with  the  existing  system  of  distribution,  have 

291 


LATTER-DAY  PROBLEMS 

socialists  gone  fairly  and  straight  into  an  impartial 
study  of  distribution?  In  the  beginning  they 
made  the  plea  that  labor  alone  was  the  source  of 
wealth.  Now  that  Marxianism  has  become  more 
or  less  obsolete,  some  socialists  have  become  op- 
portunists and  ready  to  help  on  any  one  reform — 
especially  if  it  have  government  ownership  be- 
hind it.  The  result  is  an  obvious  disagreement 
on  everything,  even  on  peace.  Many  who  are  , 
eager  for  altruistic  service,  hurt  by  the  wrongs  of 
human  nature,  and  who  have  never  looked  into 
Marx  or  even  into  recent  writers,  fly,  like  moths 
to  the  candle,  to  socialism — without  having  been 
willing  to  make  a  careful  study  of  economic  dis- 
tribution. If  acquainted  with  the  laws  of  chem- 
istry, they  see  it  would  be  unscientific  and  dan- 
gerous to  mix  gases;  but  they  do  not  hesitate, 
prompted  by  warm  feeling,  and  without  exhaus- 
tive economic  study,  to  mix  economic  gases  and 
cause  explosions.  Not  infrequently  one  becomes 
a  socialist  because  of  a  disappointment  in  love. 
Without  doubt,  many  have  reached  out  to 
socialism  because  they  find  the  church  and  re- 
ligious agencies  have  been  powerless  hi  taming 
the  wickedness  of  men.  The  inconceivable  hor- 
rors of  the  European  war  have  taken  away  from 

292 


CAPITALISM  AND  SOCIAL  DISCONTENT 

many  their  belief  in  the  possibility  of  civilizing — 
to  say  nothing  of  Christianizing — men  and  rulers. 
But  even  admitting  all  this,  it  is  certainly  clear 
that  the  world  will  not  be  reformed  by  the  de- 
struction of  capitalism. 

vm 

If,  then,  dissatisfaction  with  the  existing  sys- 
tem of  distribution  cannot  be  allayed  by  reliance 
on  inadequate  remedies  such  as  unionism  or 
socialism,  in  what  direction  should  we  look? 
That  is,  how  can  the  material  rewards  of  the 
poorer  laboring  classes  be  enlarged? 

The  upshot  of  the  whole  matter  is  clear  in  logic 
and  in  experience.  To  permanently  raise  wages 
of  any  group  of  laborers,  we  must  raise  their 
productive  power,  or  their  utility,  to  the  de- 
mander.  To  do  that  is  to  place  them,  by  nat- 
ural monopoly,  in  the  class  of  the  skilled,  where 
their  numbers  are  more  or  less  limited  relatively 
to  the  unskilled.  In  other  words,  supply  is 
thereby  directly  affected  to  the  permanent  ad- 
vantage of  those  included.  Thus  the  artificial 
monopoly  of  the  union  (which  mistakenly  aims 
at  restriction  of  supply  without  an  advance  in 
quality)  is  avoided. 

293 


LATTER-DAY  PROBLEMS 

More  than  this,  the  mere  receivers  of  wages,  in 
bargaining  for  a  definite  wage  before  work  is 
undertaken,  thereby  contract  themselves  out  of 
risk.  If  the  pricing  of  goods  goes  wrong  and  a 
loss  to  the  employer  results,  the  claim  of  the  re- 
ceiver of  wages  is  unimpaired.  But  as  the  wage- 
getter  is  thus  freed  from  all  risk  he  is  also  cut  off 
from  all  exceptional  gains.  The  factor  assuming 
industrial  risk  in  the  productive  process  is  the 
one  that  obtains  all  exceptional,  or  differential, 
gains  or  losses  due  to  unexpected  changes  affect- 
ing the  price  of  goods.  In  a  young  country  like 
the  United  States  a  well-established  business 
gains  in  volume  by  the  mere  growth  of  popula- 
tion and  industry;  long-continued  good  manage- 
ment brings  exceptional  gains  by  the  mere  fact 
of  doing  a  larger  business;  honesty  and  good 
credit  bring  from  banks  all  the  capital  needed,  in 
direct  proportion  to  the  increased  transactions. 
Moreover,  the  resources  and  opportunities  of 
such  a  country  as  ours  are  but  partly  known,  and 
are  constantly  opening  to  the  enterprising  man 
who  can  control  capital.  These  new  enterprises, 
since  accompanied  by  more  or  less  risk,  if  success- 
ful, bring  in  exceptional  gains.  In  addition",  the 
land  of  a  new  country  rises  in  value  as  it  is  more 

294 


CAPITALISM  AND  SOCIAL  DISCONTENT 

densely  settled;  in  fact,  most  farmers  of  the  last 
generation  have  gained  less  by  raising  crops  than 
by  the  rise  in  the  price  of  land. 

Consequently,  we  are  obliged  not  only  by  ex- 
perience but  by  economic  analysis  to  face  the 
fact  that  the  permanent  improvement  of  the 
wage-earning  masses  can  be  gained  only  by  a 
policy  quite  different  from  the  one  accepted  in 
the  past  and  which  forms  the  essence  of  union- 
ism. To  rise  to  a  higher  level  the  laborer  must 
get  some  of  the  advantages  possessed  by  the  em- 
ployer and  the  risk-taker  and  thus  obtain  some 
of  the  inevitable  differential  gains  characteristic 
of  a  new  and  growing  country.  In  short,  the 
true  remedy  for  a  healthy  "social  discontent" 
is  more  capitalism.  Heterodox  as  this  advice 
may  seem,  the  more  it  is  pondered  the  more  prac- 
tical, effective,  and  successful  it  will  prove. 

The  differences  marking  off  the  possessors  of 
capital  from  those  who  have  none  are  due,  as  al- 
ready pointed  out,  to  differences  in  training  and 
in  human  qualities.  There  is  no  monopoly  in 
existence  to  prevent  any  person  from  acquiring 
the  power  to  weigh  a  future  gain  over  against  a 
present  indulgence,  to  get  self-control,  patience, 
foresight,  prudence,  thrift,  and  good  judgment. 

295 


LATTER-DAY  PROBLEMS 

No  one  has  been  thus  "disfranchised."  If  a  per- 
son has  these  qualities,  he  inevitably  becomes  a 
possessor  of  savings,  and  is  thus  a  capitalist.  As 
a  consequence,  he  can  profit  by  differential  gains. 
If  he  also  buys  land,  or  a  home,  he  may  share  in 
the  "unearned  increment."  If  he  is  not  an  ex- 
pert in  production,  he  can  buy  with  his  savings  a 
share  in  industries  managed  by  the  best  experts 
of  the  age;  since  a  corporation,  drawing  a  large 
capital  from  the  small  contributions  of  the  many, 
has,  so  far  as  investments  go,  democratized  mod- 
ern industry.  The  qualities  which  come  with 
the  saving  of  capital  will  also  work  to  restrict 
imprudent  marriages  and  the  birth  of  more  chil- 
dren than  can  be  properly  fed  and  educated.  In 
short,  by  directing  attention  to  the  develop- 
ment in  the  laborers  of  certain  essential  quali- 
ties, and  calling  upon  all  the  educative  forces  of 
philanthropy  and  organized  society  to  aid  in  that 
purpose,  we  shall  answer  "social  discontent"  by 
some  permanent  gains  to  industrial  efficiency 
and  wages  and  bring  to  the  support  of  the  wage- 
earning  masses  the  wide-reaching  influences  of 
capitalism. 


296 


CHAPTER  XI 
BUSINESS  AND  DEMOCRACY 


MANY  important  forms  of  the  social  fabric 
are  to-day  in  the  "melting-pot."  New 
proposals  are  legion.  Opinion  gathers  quickly 
behind  a  taking  novelty,  and  conditions  are  such 
that  it  spreads  by  some  lateral  absorption  like 
water  Tin  a  lump  of  sugar.  Modern  democracy 
is  receptive  and  expectant  of  change — even  if  only 
for  the  sake  of  change.  Currents  of  impatient 
protest  arise  suddenly  and  flood  with  Daytonian 
rum  old  established  bulwarks  of  society.  Old 
landmarks  are  submerged.  Reverence  for  the 
authority  of  age  and  experience — and  even  of 
law — is  slight.  The  independence  of  a  strongly 
individualistic  democracy  is  feeling  the  pride  of 
new  strength,  and  delights  in  its  power  without 
much  thought  of  consequences.  If  the  rising  tide 
has  lifted  our  anchors,  where  are  we  drifting? 
Are  we  throwing  aside  compass  and  quadrant 
and  sailing  by  caprice  for  a  port  closed  in  by  fog? 

297 


LATTER-DAY  PROBLEMS 

Whether  we  like  it  or  not,  we  must  face  the 
fact  that  large  groups  of  men — and  women — have 
found  in  democracy  the  opportunity  and  occasion 
to  give  expression  to  a  raw,  untrained  pride  of 
opinion  on  the  most  difficult  questions  of  govern- 
ment and  economics.  Respect  for  authority,  for 
those  who  have  achieved  something  important, 
for  experience  and  knowledge,  has  seemingly  dis- 
appeared. Gross  ignorance  noisily  reigns  in  the 
market-place;  and  the  man  who  refuses  to  "blow 
his  own  horn,"  and  who  bases  his  claims  on  his 
merits,  is  lost  in  the  crowd.  We  have  democracy 
growing  rank;  and  leaders  settling  policies,  not 
according  to  insight  and  merit,  but  according  to 
their  effect  in  catching  votes.  An  untrained,  un- 
educated constituency,  no  matter  how  honest,  is 
a  very  paradise  for  the  demagogue.  The  confi- 
dence of  conceit  and  passion  is  in  direct  ratio 
to  ignorance.  "Cheek,"  brazen  effrontery,  cock- 
sureness,  and  unwillingness  to  hear  criticism  are 
the  marks  of  men  who  guide  other  men  of  less 
force.  These  are  some  of  the  evident  results 
of  democracy;  but  they  are  as  old  as  Socrates. 
The  same  characteristics  that  trouble  us  to-day 
showed  themselves  in  Athens.  And  yet  the  world 
has  progressed  since  those  days  in  Athens. 

298 


BUSINESS  AND  DEMOCRACY 

On  all  sides  we  hear  of  "social  unrest/ '  of 
socialism,  of  sabotage,  and  the  Industrial  Work- 
ers of  the  World.  Many  intelligent  people  seem 
to  have  acquired  a  stubborn  conviction  that  no 
man  can  have  become  rich  honestly. 

It  is  doubtless  true  that  many  forms  and  opin- 
ions are  undergoing  change.  Some  things,  to  be 
sure,  are  certainly  going  by  the  board.  But  while 
changes  are  coming,  the  stars  in  their  courses  still 
show  us  the  same  firmament.  Crews  may  mutiny 
against  officers;  but  officers  and  discipline  are 
still  the  rule  of  the  sea.  We  may  have  eruptions 
of  ignorance  and  passion;  but  sooner  or  later  the 
shallow  and  the  criminal  give  way  before  the  in- 
evitable, permanent  forces  of  right  and  progress. 

II 

Democracy  in  its  old  significance  bore  on  polit- 
ical relations  and  equality  of  treatment  by  the 
government.  But  now  we  hear  of  industrial  de- 
mocracy and  economic  equality;  that  is,  since 
one  man's  vote  is  as  good  as  another's,  it  is  as- 
sumed that  one  man's  wages  should  be  as  good  as 
another's.  Right  there  is  the  break  with  logic 
and  human  nature:  all  men  never  were  born  equal 
in  industrial  capacity,  and  consequently  have  no 

299 


LATTER-DAY  PROBLEMS 

right  to  equal  industrial  rewards.  Indeed,  the 
whole  distribution  system  of  wealth  is  necessarily 
based  on  the  fact  that  some  men  are  more  efficient 
in  productive  industry  than  others. 

There  is,  moreover,  a  further  association  with 
industrial  democracy:  it  is  assumed  that  the  ex- 
isting system  of  industry  supplied  by  private  capi- 
tal and  managed  by  individuals  is  unjust;  that 
men  are  not  getting  "social"  and  economic  jus- 
tice; and  that,  so  long  as  there  are  poor  men, 
large  fortunes  must  have  been  unjustly  accumu- 
lated. And  so  we  are  made  aware  that,  when 
laborers  in  any  field,  having  formerly  received,  say, 
three  dollars  a  day,  are  by  virtue  of  strikes  now 
getting  five  or  six  dollars,  and  for  less  hours  in  the 
day,  they  are  not  thereby  satisfied.  They  have 
no  intention  of  stopping  the  campaign  for  higher 
wages;  if  they  have  already  doubled  wages,  why 
not  double  them  again?  if  they  have  gained  five 
dollars  a  day,  why  not  keep  on  until  they  have 
fifty?  what  is  to  prevent  this  consummation? 
The  truth  that  increasing  wages  for  the  same  ef- 
fort increases  expenses  of  production  and  conse- 
quently prices  to  the  consumer  is  lightly  ignored. 
As  long  as  employers  have  palatial  homes,  fine 
horses  and  automobiles,  and  dine  at  tables  of 

300 


BUSINESS  AND  DEMOCRACY 

Levi,  why  should  laborers  not  keep  on  demanding? 
In  brief,  industrial  democracy  assumes  that  wealth 
is  unjustly  distributed,  and  its  avowed  end  is  a 
new  and  different  distribution.  This  purpose 
every  man  who  has  capital  invested  in  his  own 
business  must  face.  It  is  the  purpose  of  growing 
numbers  in  our  community;  and  these  numbers, 
having  votes,  wish  to  use  state  and  national  legis- 
lation to  aid  in  forcing  their  system  on  society. 
Then  those  who  seek  high  office,  and  wish  to  se- 
cure these  votes,  are  cleverly  bidding  for  follow- 
ers under  the  standard  of  "social  justice."  They 
have  spread  their  sails  to  catch  that  particular 
slant  of  wind  to  gain  their  desired  end. 

What  does  "social  justice"  mean?  Supposedly, 
it  means  the  extension  of  justice  not  now  obtain- 
able by  law  to  a  field  of  economic  rewards  in  which 
injustice  is  assumed.  For  instance,  if  wages  in 
some  sweated  industries  are  very  low,  it  would 
be  "social  justice"  to  raise  them.  But  if  wages 
should  be  equal  among  those  of  equal  earning  ca- 
pacity, how  can  the  wages  of  the  less  capable  be 
made  equal  to  those  of  the  more  highly  capable? 
Certainly  not  by  legislation.  Such  a  position, 
however,  is  not  inconsistent  with  the  belief  that 
intelligent  legislation  may  often  change  environ- 

301 


LATTER-DAY  PROBLEMS 

ment  so  as  better  to  equalize  opportunity  and 
choice  of  occupation.  But  we  do  not  need  a  new 
phrase,  "social  justice,"  to  cover  justice  to  men 
for  acts  included  under  accepted  codes.  For  in- 
stance, a  disease-breeding  sweat-shop  is  a  viola- 
tion of  municipal  health  regulations  and  to  be 
dealt  with  accordingly.  "Social  justice"  is  a 
convenient  phrase  to  the  politician,  because  it 
appeals  to  most  men's  sense  of  dissatisfaction 
with  their  material  reward,  and  it  is  too  vague 
to  be  concretely  challenged. 

m 

The  reason  that  some  men  are  rich  and  some 
are  poor  has  nothing  to  do  with  their  goodness;  a 
good  man  may  be  stupid  or  he  may  have  an  artis- 
tic temperament  unaccompanied  by  practical  busi- 
ness sense;  while  another  man,  just  as  honest, 
may  have  foresight,  good  judgment,  a  cool  head, 
executive  ability,  and  great  business  sagacity. 
The  former  is  likely  to  remain  poor;  while  the 
latter  may  amass  a  great  fortune.  The  former 
may  be  a  great  artist,  and,  from  the  side  of  cul- 
ture, he  may  be  a  more  valuable  man  to  society 
than  the  latter:  it  all  depends  on  whether  we  rata 
creative  art  higher  than  riches.  It  is  no  disparage- 

302 


BUSINESS  AND  DEMOCRACY 

ment  to  be  poor,  if  one  can  serve  society  in  other 
ways  than  by  gaming  wealth;  and  many  men 
gain  wealth  who  do  nothing  for  the  well-being  of 
others  in  society.  Now,  without  attempting  to 
grade  the  pursuits  of  men,  whether  the  accumu- 
lation of  wealth  is  higher  or  lower  in  value  than 
other  pursuits,  most  of  us  are  obliged  to  face  the 
practical  problem  of  income.  It  is  a  purely  ma- 
terial question;  it  concerns  man's  capacity  to  get 
material  rewards.  To  some  people — fortunately 
not  all — this  is  the  sole  problem.  And  it  may 
here  be  observed  that  socialism  is  a  purely  ma- 
terial philosophy;  its  objective  is  to  overturn 
existing  privately  managed  industry  in  order  to  ob- 
tain for  the  workers  more  material  wealth  to  con- 
sume. They  may  not  get  it;  but  that  is  their 
end.  It  is  not  their  aim  to  get  more  goodness, 
but  more  material  wealth;  unless  by  having  more 
to  spend  they  expect  to  grow  in  grace. 

By  unthinking  persons  discrimination  is  thrown 
to  the  wind.  If  they  hear  of  one  rich  man  who  is 
evil,  all  rich  men  are  evil.  Without  any  economic 
examination,  it  is  assumed  that  if  a  man  is  rich 
it  can  be  only  because  he  has  got  riches  at  the  ex- 
pense of  others,  and  especially  of  his  laborers. 
Hence  the  theory — already  alluded  to — that  work- 

303 


LATTER-DAY  PROBLEMS 

men  are  right  in  pressing  for  higher  wages  until 
all  shall  become  equally  rich.  That  is  in  essence 
the  hope  of  industrial  democracy. 

Let  us  face  this  assumption.  "All  the  fools 
are  not  dead  yet,"  it  is  true;  but  it  is  equally 
true  that  the  saving  grace  of  common  sense  is  still 
a  characteristic  of  our  American  people.  Let  me 
give  a  concrete  case  which,  after  all,  is  only  typical 
of  legions  of  others. 

Among  the  cowboys  on  a  Southwestern  ranch 
was  one  quiet,  silent  fellow  of  eighteen;  he  rode 
well,  knew  the  nature  of  a  cow,  took  a  joke  on 
himself  good-naturedly,  and  said  nothing.  At 
the  end  of  the  month  the  "bunch  blew  hi"  the 
month's  wages  at  the  saloons  in  the  nearest  town; 
but  our  young  man,  in  a  lonesome  way,  stayed 
on  the  ranch  and  did  not  go  to  town.  He  took 
the  usual  jibes,  grinned,  and  said  nothing.  He 
was  fed  and  found  on  the  ranch,  and  at  the  end 
of  the  year  he  had  $360  to  his  credit.  This  went 
on  three  or  four  years.  Suddenly  he  was  known 
to  have  pre-empted  160  acres  of  the  best  land  in 
the  region;  he  built  his  shack  and  stocked  his 
farm  from  his  savings.  He  was  a  good  judge  of 
horses  and  cattle,  and  worked  indefatigably  on 
his  farm — which  was  truly  his  "savings  bank." 

304 


BUSINESS  AND  DEMOCRACY 

In  one  year  his  wheat  sold  for  $3,500.  His 
"stand"  of  alfalfa  was  as  good  as  any  in  the 
country.  He  needed  more  help,  and  he  employed 
some  of  the  boys  he  had  known  on  the  old  ranch, 
and  he  paid  them  more  than  they  had  earned  in 
the  saddle.  Then,  after  having  paid  for  his  farm, 
he  had  enough  to  buy  an  adjoining  160  acres  for 
cash;  he  had  a  rapidly  increasing  herd  on  the 
open  range.  In  a  very  few  years  he  became  the 
owner  of  1,200  acres  of  alfalfa  in  Texas,  apart 
from  his  other  farms  and  herds.  His  annual  in- 
come at  one  tune  some  years  ago  from  wheat 
alone  was  over  $10,000.  Then  he  invested  in 
more  land,  bought  bank  stock,  helped  build  new 
railways,  and  was  in  recent  years  popularly  ac- 
claimed a  millionaire. 

Now,  did  this  man  gain  his  fortune  at  the  ex- 
pense of  others?  Any  other  of  those  mad-riding, 
reckless  cowboys  could  have  done  the  same  if 
they  had  had  the  qualities  that  industrial  success 
demands.  Ay:  there's  the  rub.  Industrial  suc- 
cess is  personal,  not  social.  Society  is  not  hold- 
ing a  man  down;  the  existing  social  system  is  not 
keeping  men  at  the  bottom;  it  is  their  own  per- 
sonal deficiencies  that  keep  them  there.  Indus- 
trial success  can  be  won  at  a  price;  and  the  price 

305 


LATTER-DAY  PROBLEMS 

is  observance  of  the  inevitable  rules  of  the  game 
— namely,  sobriety,  industry,  saving,  avoidance  of 
speculation,  knowledge  of  human  nature,  good 
judgment,  common  sense,  persistence,  intelli- 
gence, and  integrity.  No  social  system  ever  keeps 
a  man  down  who  has  these  qualities.  Is  it  not 
the  best  thing  for  the  world  to  find  out  that  in- 
dustrial success  can  be  won  only  by  the  display  of 
these  qualities?  Is  it  "social  justice"  to  pro- 
claim to  the  thriftless,  or  careless,  that  the  social 
system  is  responsible  for  their  scanty  means,  and 
that  they  should  claim  a  share  in  the  wealth  of 
our  rich  and  successful  cowboy?  He  should  be 
made  to  divide.  On  with  "social  justice"  to  the 
unfortunate;  down  with  the  plutocrats!  There 
is,  indeed,  much  wrong  in  the  world  to  be  righted; 
but  it  does  not  avail  to  separate  wrong  from  its 
personal  nature  and  ascribe  it  to  a  vague  thing 
like  the  social  system. 

IV 

"Yes:  what  you  say  is  obvious,"  I  hear  some 
one  remark,  "but  how  about  the  malefactors  of 
great  wealth ?  "  In  the  first  place,  size  is  no  crime; 
if  business,  legitimately  carried  on,  becomes  very 
large,  that  is  a  mark  of  success  and  of  the  phe- 

306 


BUSINESS  AND  DEMOCRACY 

nomenal  opportunities  of  a  new  country  abound- 
ing in  natural  resources,  inhabited  by  a  constantly 
growing  population.  Great  fortunes  honestly 
won  are  just  as  possible  as  small  fortunes  hon- 
estly won.  "Very  good;  but  look  at  the  big  ras- 
cals in  high  finance,"  says  the  suspicious  man. 
Now  let  us  face  that  point  directly.  Here  is  the 
place  to  insist  upon  a  significant  distinction:  rob- 
bery, cheating,  stealing,  falsehood,  dishonesty 
are  to-day  under  the  ban  of  law;  the  laws  of  the 
land  are  sufficient  to  convict  any  perpetration  of 
these  wrongs,  if  there  is  proof;  and  we  all  insist 
that  the  law  shall  be  enforced.  This  we  are  all 
agreed  upon.  But,  on  the  other  hand,  if  I  am 
poor  and  B  is  very  rich,  am  I  justified  in  declar- 
ing that  B  is  thereby  a  "malefactor  of  great 
wealth."  That  assumes  the  economic  proposition 
that  no  man  could  become  very  rich  except  at  the 
expense  of  others  or  by  unfair  practices.  That 
proposition  cannot  be  admitted  for  one  moment. 
We  may  readily  admit  that  some  men  may  have 
become  rich  by  rascality,  by  cheating  others,  by 
devices  which  escape  the  letter  of  the  law,  and 
which  are  dishonest  and  unmoral;  but  it  is  stupid 
to  say  that  that  is  true  of  all  rich  men.  It  is  the 
mark  of  the  untrained  mind  that  it  can  make  no 

307 


LATTER-DAY  PROBLEMS 

discriminations.  Indeed,  we  are  living  in  such  a 
hysterical  age  that  no  discriminating  judgments 
seem  to  be  popular.  Consequently  the  business 
world  must  face  the  fact  that  half-baked  teach- 
ing, and  demagogic  appeals  to  prejudice,  have 
made  masses  of  our  people  believe  that  if  a  man 
is  very  rich  he  is  necessarily  a  bad  man.  It  is  as- 
sumed that  no  man  ought  to  accumulate  more 
than  a  certain  amount;  and  there  follows  the 
corollary  that  the  masses  of  voters,  being  poor, 
should  force  the  rich  to  give  up  a  portion  of  their 
accumulations;  and  one  form  of  this  contention 
appears  in  a  demand  for  progressive  taxes  to  pay 
a  greater  proportion  of  the  expenses  of  govern- 
ment. Such  a  policy  has  no  economic  basis;  it  is 
solely  the  development  of  industrial  democracy. 
A  counting  of  noses  settles  that  question,  not  a 
counting  of  economic  arguments.  As  long  as  eco- 
nomic questions  are  settled,  not  by  expert  advice, 
but  by  universal  suffrage,  there  is  nolielp  for  the 
business  world  but  the  education  of  the  voter. 

v 

The  equality  of  political  democracy,  as  I  have 
said,  is  by  facile  logic  transferred  to  industrial 
democracy;  but  these  two  realms  of  human  ac- 

308 


BUSINESS  AND  DEMOCRACY 

tions  are  founded  on  radically  different  bases  and 
conditions.  What  is  true  of  one  is  not  true  of  the 
other.  All  men  have,  and  should  have,  equal 
rights  before  the  law;  each  should  have  equal  pro- 
tection of  life  and  property;  but  if  A  is  sober  and 
thrifty  and  saves  up  $10,000,  and  if  B  is  never 
sober  and  owns  perhaps  only  his  horse,  then  the 
state  owes  A  the  same  protection  over  his  $10,000 
that  it  owes  B  over  his  one  horse.  And  the  prin- 
ciple is  the  same  whether  A  has  $10,000  or  $100,- 
000,000— provided  he  does  not  violate  the  rights 
of  others.  In  industrial  democracy  B  ought  to 
have  no  more  right  over  A's  $10,000  than  he  has 
over  my  overcoat.  Unless  that  is  founded  in 
adamant,  what  protection  has  B  for  his  horse 
against  the  dishonest,  powerful  rich  man?  The 
Middle  Ages  is  the  answer  to  that. 

But  industrial  democracy  openly  attacks  this 
system  of  property  and  its  theory  of  justice.  It 
is  sometimes  forgotten  that  the  development  of 
individual  private  property  since  600  A.  D.  has 
been  a  large  part  of  the  growth  of  civil  liberty 
and  the  acquisition  of  freedom  and  equality  by 
the  individual.  It  was  not  forced  on  the  race  by 
any  great  conqueror.  Like  all  permanent  law,  it 
is  an  expression  of  the  wishes  and  customs  of  the 

309 


LATTER-DAY  PROBLEMS 

race.  Our  rights  to  property  to-day  are  what 
they  are  because  the  race  is  what  it  is.  Now 
comes  socialism,  in  all  its  varied  proposals,  and 
urges  us  to  put  the  control  of  capital  and  indus- 
try in  the  hands  of  the  state.  It  is  in  pursuit  of 
material  rewards.  If,  in  the  open  competition  of 
men  with  men,  in  the  industrial  struggle,  B  is 
surpassed  by  A,  he  must  accept  his  individual 
failure;  but  on  what  ground  can  B  ask  the  state 
to  make  A  share  the  results  of  his  skill  with 
him?  That  is  the  essence  of  socialism:  as  I 
have  said  elsewhere,  it  is  a  philosophy  of  fail- 
ure. It  is  not  likely  to  succeed  in  the  ulti- 
mate end;  but  it  is  coloring  industrial  democracy 
through  and  through.  Its  practical  form  is  gov- 
ernmental interference  with  industry.  In  the 
case  of  public  utilities  and  monopolies  there  is  a 
reason  for  the  intervention  of  the  state,  but  it  is 
not  a  socialistic  reason.  Whenever  an  industry 
is  by  nature  more  or  less  monopolistic,  competi- 
tive conditions  can  be  best  preserved  by  the  su- 
pervision of  society.  But,  standing  on  the  rock 
of  civil  and  religious  freedom,  one  must  fight 
every  attempt  to  regulate  and  restrict  the  free- 
dom of  individual  initiative  in  industry  wherever 
it  may  be  shown  that  it  does  not  infringe  on  the 
rights  of  others. 

310 


BUSINESS  AND  DEMOCRACY 

There  is  to-day  being  created  a  nebulous  area 
in  human  activities  in  which  the  legislatures  and 
the  courts  are  being  urged  to  interfere  with  the 
acts  of  individuals  on  the  ground  that  the  state 
knows  better  than  the  individual  what  is  good 
for  him;  that  you  can  make  men  better  by  legis- 
lation; and  can  prevent  "social  power"  from 
going  to  waste.  There  is  danger  in  that  attitude 
to  the  efficiency  and  virility  of  the  race.  For 
our  salvation,  while  we  urge  altruistic  ideals,  we 
must  preserve  the  soundness  of  the  individual 
unit  if  society  as  a  whole  is  to  keep  its  vigor. 

Yet  men  of  note  sometimes  show  a  sort  of  in- 
tellectual strabismus  on  such  a  simple  matter  as 
the  functions  of  capital — which  comes  into  exis- 
tence only  by  personal  control  over  consumption, 
and  is  necessary  to  the  very  existence  of  modern 
production  on  its  present  scale  and  necessary  to 
the  very  consumption  of  the  laboring  classes.  We 
are  told  that  "one  of  the  greatest  pieces  of  work 
mapped  out  for  the  workers  of  this  century  was 
to  socialize  steam  as  earlier  inventions  and  dis- 
coveries had  been  socialized  and  made  the  prop- 
erty of  the  whole  people  in  past  centuries.  .  .  . 
The  nineteenth  century  saw  the  greatest  revolu- 
tion of  the  world — that  of  feudalism  to  industrial- 
ism. The  twentieth  century  will  see  an  even 


LATTER-DAY  PROBLEMS 

greater  revolution,  that  from  the  control  of  capital 
to  the  control  of  men."1  To  socialize  steam !  Why 
not  socialize  the  spots  on  the  sun,  or  the  new  River 
of  Doubt  in  Brazil,  or  the  serum  of  infantile  paraly- 
sis? Furthermore,  who  now  controls  capital  but 
men?  Or  is  it  meant  that  thriftless  men  who 
never  accumulate  any  capital  should  be  put  in 
control  of  capital  created  by  other  men  ?  The  pur- 
pose could  be  more  quickly  accomplished  by 
abolishing  all  laws  against  stealing. 

VI 

The  analysis  of  the  whole  situation  gives  us  a 
very  clear  understanding  of  what  business  must 
face.  The  essential  idea  of  industrial  democracy 
is  equality  of  industrial  rewards.  What  is  being 
done  to  reach  that  objective?  Left  to  purely  eco- 
nomic processes,  it  would  be  impossible  of  realiza- 
tion; that  is,  in  the  give  and  take  of  actual  busi- 
ness, it  would  never  happen  that  the  unskilled 
should  receive  the  same  wages  as  the  skilled,  or 
that  men  of  no  executive  ability  should  be  in- 
trusted with  important  work  of  direction  in  posi- 
tions of  great  responsibility  and  be  given  similar 

1  William  Allen  White,  as  reported  in  the  press,  May  14, 
1910. 


BUSINESS  AND  DEMOCRACY 

rewards.  Then  how  does  industrial  democracy 
intend  to  gain  its  ends?  Simply  by  introducing 
the  machinery  and  methods  of  political  democracy 
into  industrial  democracy;  by  treating  all  social 
and  industrial  grievances  politically.  Now,  note 
what  that  means.  It  transfers  the  solution  of  an 
industrial  difficulty  from  the  realm  of  economics 
into  the  realm  of  politics.  By  taking  away  such 
a  thing,  for  example,  as  price-fixing  from  the 
realm  of  economic  forces  like  demand  and  supply, 
it  hands  it  over  to  decision  by  the  political  agen- 
cies of  the  state. 

Let  me  illustrate.  Railways  supplied  with 
capital  by  private  persons  serve  a  quasi-public 
service  and  are  properly  subjected  to  govern- 
mental supervision.  Railways,  however — leav- 
ing out  of  account  fraudulent  manipulation — sup- 
ply transportation  supposedly  at  a  price  sufficient 
to  cover  legitimate  expenses  and  a  reasonable 
rate  of  dividend  on  the  capital  invested.  In  any 
ordinary  business,  when  the  cost  of  materials 
and  wages  rises,  the  manufacturer  may  raise  the 
price  of  his  product  to  the  consumer.  Not  so  with 
the  railways  under  industrial  democracy.  The 
government  leaves  materials  and  wages  to  eco- 
nomic causes  which  have  greatly  increased  the 


LATTER-DAY  PROBLEMS 

cost  of  operating  the  railways;  but  political  agen- 
cies prevent  the  railways  from  correspondingly 
raising  the  rates  for  transportation. 

Suppose  the  state  were  to  say  to  men  hi  private 
business  that  when  wages,  rents,  coal,  and  ma- 
terials rise  they  must  not  raise  the  prices  of  their 
goods.  How  would  they  feel  ?  They  would  think 
that  was  going  a  little  too  far;  and  yet  very  sim- 
ilar proposals  affecting  railways  are  now  before 
us.  Let  me  illustrate  by  another  instance.  Not 
realizing  that  wages  must  be  paid  in  some  pro- 
portion to  earning  power,  our  industrial  democ- 
racy is  proposing  to  enact  a  law  fixing  a  minimum 
rate  of  wages.  Although  now  introduced  for 
women,  it  is  well  understood  that  it  will  be  fol- 
lowed by  similar  laws  for  men.  It  introduces  a 
new  and  unjustifiable  basis  of  wages — that  wages 
shall  be  paid  on  the  shifting  basis  of  what  it  costs 
to  live — the  thriftless  to  receive  as  much  as  the 
competent. 

Because  of  the  growing  assumption  that  it  is 
"social  justice"  for  the  state  to  take  away  wealth 
from  those  who  have  and  give  it  to  those  who* 
have  not,  we  are  having  some  remarkable  develop- 
ments in  the  practice  of  taxation.  Such  needs  as 
roads,  bridges,  schools,  asylums,  hospitals,  care 


BUSINESS  AND  DEMOCRACY 

of  the  poor,  and  the  like  have  been  generally  re- 
garded as  desirable  objects  of  taxation.  But  now 
we  are  undoubtedly  confronted  with  a  new  theory 
on  which  taxation  is  to  be  extended.  Since  great 
numbers  of  men  are  poor  and  are  receiving  small 
industrial  rewards,  it  is  proposed  that  the  state 
should  by  taxation  take  from  the  wealth  of  the 
country  and  expend  it  in  ways  that  would  prac- 
tically increase  the  returns  of  the  many.  This  is 
the  fundamental  reason  for  increasing  taxes  to 
meet  "social  needs."  There  is  an  important  dis- 
tinction to  be  drawn  here.  On  the  one  hand  are 
those  objects  which  could  be  carried  out  only  by 
the  power  of  the  state  and  by  some  social  co- 
operation beyond  the  power  of  individual  initia- 
tive; on  the  other  hand  are  those  expenditures 
which,  however  gracious  and  appealing,  pauperize 
the  classes  relieved  from  desirable  self-sacrifice. 
To-day,  it  is  no  exaggeration  to  say  that  public 
expenditures  which  are  intended  to  catch  the 
votes  of  the  many  under  the  pretense  of  "social 
justice"  are  becoming  enormous.  The  increasing 
taxes  on  business  are  taking  on  the  character  of 
a  portent.  What  is  the  end?  Assuming  the 
growing  intention  to  expend  for  "social"  pur- 
poses, new  taxes,  like  the  income  tax  and  the  tax 


LATTER-DAY  PROBLEMS 

on  land  value,  are  devised,  but  without  in  any 
way  reducing  the  burden  of  existing  forms  of 
taxation. 

vn 

This  vague  area  in  which  increasing  action  by 
the  state  is  urged  is  the  field  wherein  all  the  novel 
projects  of  the  day  arise.  This  vagueness  is  a 
paradise  for  dreamers,  sentimentalists,  and  revo- 
lutionists. If  I  am  not  mistaken,  one  of  the  side- 
shows of  industrial  democracy  is  the  "Return  of 
Government  to  the  People."  If  any  wrong  is 
being  done  and  the  "law"  is  silent,  then  the 
sooner  a  new  law  is  made  to  cover  a  new  situa- 
tion the  better;  we  are  all  agreed  on  that.  More- 
over, it  must  be  admitted  that  the  face  of  the 
business  world  is  changing;  new  methods  of  doing 
business  are  superseding  old  ones;  centres  of 
trade  are  shifting;  distance  is  annihilated;  in- 
ternational relations  touch  our  daily  transaction^. 
The  regulation  of  the  rights  of  individuals  in' 
their  new  relations  is  a  complex  and  serious  mat- 
ter. For  instance,  the  development  of  irrigation 
and  water-power  has  forced  the  creation  of  a  new 
body  of  law.  Also,  for  instance,  the  form  of  our 
government,  with  State  and  federal  laws  valid 

316 


BUSINESS  AND  DEMOCRACY 

over  the  same  territory,  raises  a  whole  series  of 
new  problems  as  to  interstate  commerce  and 
the  regulation  of  monopolies.  These  problems 
are  legion;  they  are  at  once  new  and  difficult. 

With  the  history  of  the  growth  of  civil  lib- 
erty behind  us,  with  the  experience  of  centuries 
to  warn  us,  to  what  kind  of  persons,  and  in 
what  way,  should  we  intrust  the  solution  of  these 
problems?  The  fine  flower  of  Anglo-Saxon  civili- 
zation— its  gift  to  the  rest  of  the  world — is  repre- 
sentative government.  What  is  implied  in  that? 
Simply  that  difficult  matters  of  lawmaking  should 
not  be  left  to  the  untrained,  to  a  hit-and-miss 
body  of  all  citizens,  but  that  the  whole  body 
should  pick  out  the  best-trained,  the  best-quali- 
fied, and  tell  them  to  give  their  whole  time  to 
this  expert  service,  since  the  average  citizen, 
busied  in  industry,  has  no  time  or  maybe  no 
capacity  for  specialized  study.  That  is  practical, 
intelligent  government  for  the  people  and  by  the 
people.  It  is  the  application  of  the  old  principle 
of  division  of  labor. 

Now,  on  what  ground  is  it  advisable  to  take 
away  the  initiative  in  legislation  from  represen- 
tatives of  all  the  people  and  refer  it  to  the  people 
themselves?  On  the  ground  that  representatives 


LATTER-DAY  PROBLEMS 

do  not  represent?  Then  what  is  the  difficulty  in 
selecting  those  who  do  ?  If  we  say  the  whole  body 
cannot  do  this,  then  we  are  effectively  indicting 
the  intelligence  and  motives  of  this  general  body 
of  voters.  If  this  be  accepted,  then  they  are  cer- 
tainly unfit  to  pass  on  legislation  which  requires 
specialized  expertness.  There  is  no  satisfactory 
answer  to  this  argument.  Obviously,  the  only 
remedy  for  poor  legislation  is  greater  alertness 
and  responsibility  in  choosing  our  representa- 
tives. That,  in  my  judgment,  is  the  pith  of 
the  whole  matter  raised  by  the  advocates  of  the 
initiative  and  referendum.  Popular  voting  on 
technical  questions  of  money,  banking,  labor, 
price-regulation,  and  monopolies  is  the  height  of 
absurdity.  If  you  have  an  attack  of  appendicitis 
you  do  not  call  in  as  surgeon  the  first  stranger 
you  meet  on  the  street.  Why  do  we  not  need  the 
expert  on  legislation  affecting  industry  as  well  as 
the  expert  in  surgery?  We  are  most  truly  return- 
ing the  government  to  the  people  when  we  are 
placing  government  in  the  hands  of  honest  and 
intelligent  representatives,  and  taking  it  away 
from  the  bigoted  and  the  ignorant,  whoever  they 
may  be. 


BUSINESS  AND  DEMOCRACY 

vin 

In  this  brief  way  the  salient  characteristics  of 
recent  thinking  known  as  industrial  democracy 
have  been  touched  upon.  Whither  are  we  drift- 
ing? What  is  the  meaning  to  business  of  this 
"new  thought"  ?  By  business,  of  course,  is 
meant  legitimate  business,  thoughtfully  and  hon- 
estly conducted.  It  is  obvious  that  such  busi- 
ness is  threatened  with  very  serious  misconcep- 
tions, with  wide-spread  delusions  having  no 
economic  justification.  It  is  not  to  the  point  to 
say  these  are  illogical  or  mistaken;  saying  so  does 
not  change  the  fact  of  their  existence.  Fantastic 
proposals  affecting  business  are  urged  upon  legis- 
latures in  order  to  give  the  effect  of  law  to  some 
passing  wave  of  sentiment.  And  we  must  remem- 
ber, too,  that  a  great  many  of  these  proposals 
are  put  forward  by  enthusiastic  radicals  who  are 
often  quite  sincere  and  honest  in  their  beliefs. 
Attacks  are  being  made  on  established  institu- 
tions; nothing  is  taken  for  granted;  and  the  jus- 
tification for  established  institutions  must  be 
given  anew.  In  short,  we  can  hold  the  bulwarks 
of  constitutional  government  only  by  fighting 
for  them.  Democracy  gives  an  open  forum  for  all 

3*9 


LATTER-DAY  PROBLEMS 

shades  of  opinion  from  conservatism  to  radicalism 
— and  worse;  and  that  is  as  it  should  be.  If  es- 
tablished institutions  are  the  best,  they  will  sur- 
vive without  question;  but  we  are  undoubtedly 
in  for  a  hot  debate  on  fundamentals.  I,  for  one, 
welcome  that  discussion;  after  a  full  and  free  dis- 
cussion the  American  people  have  never  gone  far 
wrong.  A  state  is  dead  that  cannot  bear  free 
discussion.  But  the  situation  calls  for  serious  and 
alert  intelligence  to  watch  that  the  rights  of  legiti- 
mate business  are  well  defended  and  not  weak- 
ened. Attacks  are  not  to  be  regarded  as  a  basis 
for  discouragement,  but  rather  as  a  stimulus  to 
virile  thinking  and  activity.  A  dead  fish  can 
float  down-stream;  only  a  live  fish  can  swim  up- 
stream. 

There  is  no  use  disguising  the  fact  of  a  tendency 
in  modern  industrial  democracy  to  an  exagger- 
ated doctrine  of  equality;  by  that  I  mean  a  ten- 
dency to  regard  all  men  as  having  a  right  to  equal 
shares  of  wealth,  independent  of  the  God-given 
differences  in  mind  and  body.  Dissatisfaction 
with  existing  shares,  as  now  distributed,  is  gen- 
eral; and  few  there  are  who  are  sufficiently  trained 
to  explain  why  rewards  are  what  they  are  to-day. 
If  dissatisfaction  is  general,  and  if  economic  in- 

320 


BUSINESS  AND  DEMOCRACY 

sight  and  training  are  rare,  you  have  the  inevi- 
table field  for  agitation.  Educating  the  public 
intelligence  is  the  obvious  remedy;  but  wide- 
spread education  hi  economics  is  a  slow  process. 
Meanwhile,  gusts  of  popular  opinion,  no  matter 
how  wrong,  are  certain  to  break  forth,  and  the 
kind  of  legislators  we  now  choose  are  likely  to  fol- 
low public  opinion  hi  order  to  retain  office.  Hence, 
we  are  almost  certain  to  have  quixotic  legislation 
on  business  concerns.  If  wrong,  they  will  do 
damage.  When  the  radicals  are  not  influenced 
by  reason  and  experience,  there  is  no  teacher  so 
convincing  as  the  merciless  blows  of  disaster. 
"Experience  is  a  dear  school,  and  fools  learn 
therein."  There  is  probably  no  other  schoolmas- 
ter likely  to  teach  the  millions  of  men  unable  to 
think  correctly  in  economics.  As  to  the  final  re- 
sult there  can  be  no  doubt:  the  light-headed  agi- 
tator of  the  day  and  his  followers,  buoyed  up  by 
an  inflated  gas  of  passion,  may  have  a  brief  flight 
of  triumph,  to  be  followed  by  a  destructive  fall 
to  cold  fact.  In  this  process  damage  will  be  done; 
both  conservatives  and  radicals  will  suffer;  but 
the  middle  truth  of  common  sense  and  right  will 
always  emerge,  and  the  fads  will  sooner  or  later 
be  forgotten.  The  extremes  of  these  outbreaks 

321 


LATTER-DAY  PROBLEMS 

will  be  diminished  in  violence  just  in  proportion 
as  public  opinion  is  better  educated  and  better 
regulated. 

DC 

The  business  man,  as  a  rule,  is  a  coward.  He 
is  usually  willing  to  compromise  in  any  serious 
emergency  hi  order  to  protect  his  earnings;  his 
credit  is  probably  extended  to  the  limit  of  the 
willingness  of  the  banker  to  lend;  his  credit  and 
his  operations  are  dependent  on  his  earnings, 
which  are  fully  known  to  his  banker.  Conse- 
quently, it  is  unusual  for  him  to  stand  out  for  a 
principle  or  to  fight  for  his  rights.  How  can  he 
as  an  individual  oppose  his  hundreds  or  thousands 
of  employees?  But  if  disaster  is  the  inevitable 
outcome  of  industrial  democracy,  he  cannot  es- 
cape it  by  procrastination.  What  can  he  do  ? 

The  man  who  carries  on  a  legitimate  business 
must  do  the  same  thing  that  the  employee  has 
done:  he  must  organize,  and  resort  to  collective 
bargaining,  for  his  own  salvation.  But,  it  is  said, 
the  laws  forbid  this;  while  labor  unions  are  being 
excepted  by  Congress.  A  curious  hysteria  pos- 
sesses our  politicians.  The  chiefs  of  the  labor  or- 
ganizations sat  in  the  galleries  of  Congress  to 

322 


BUSINESS  AND  DEMOCRACY 

watch  and  mark  the  tfotes  of  members  in  the  in- 
terest of  the  labor  vote  in  coming  campaigns  for 
re-election.  To  show  how  far  this  hysteria  has 
developed,  imagine  the  effect  if  the  chief  leaders 
of  big  business  were  to  ask  for  special  legislation 
and  then  openly  gather  in  the  galleries  of  Con- 
gress to  "spot"  those  who  voted  against  their 
interests. 

Meanwhile,  every  means  should  be  used  to 
further  equality  in  industry.  It  should  be  the  aim 
of  every  one  to  see  that  those  of  equal  capacities 
should  have,  as  nearly  as  possible,  equal  rewards. 
In  the  actual  whirl  of  busy  production  this  may 
not  always  be  so;  and  our  business  men  are  in 
duty  bound  to  see  that  there  is  no  cause  for  com- 
plaint on  the  score  of  a  desire  to  get  profits  at 
the  expense  of  another  human  being.  The  rich 
and  successful  are  under  a  moral  obligation  to  the 
poor  and  unsuccessful.  Much  may  be  done  to 
show  the  workmen  that  they  are  regarded,  not  as 
machines  to  earn  profit,  but  as  human  beings  to 
be  given  greater  comfort  and  happiness.  In  the 
sense  of  equal  wages  for  equal  capacities,  indus- 
trial democracy  can  hope  for  industrial  equality. 


323 


CHAPTER  XII 
ECONOMIC  LIBERTY 


GEORGE  ELIOT  has  described  tragedy  as 
the  irrevocable  union  of  two  irreconcilable 
forces.  The  main  task  of  life,  indeed,  seems  to 
be  to  find  adjustments  between  forces  which 
threaten  to  be  irreconcilable  and  thus  produce 
tragedy.  Too  often  the  issue  is  either  co-opera- 
tion or  tragedy.  Marriage  is  an  obvious  illustra- 
tion: two  unlike  natures  mated  for  life  create 
difficult  situations.  When  Adjustment  flies  out 
at  the  window,  Tragedy  stalks  in  at  the  door. 

And  so  it  goes  in  our  public  as  well  as  in  our 
private  relations:  emotional  impulses  and  raw 
license  push  men  to  serve  their  selfish  aims;  but 
license  is  certain  to  be  met  by  a  power  greater 
than  itself.  Unrestrained  impulse  must  be  wedded 
to  co-operation  or  else  we  have  tragedy,  political 
and  economic.  Unless  the  warring  elements  of 
human  nature  are  governed  by  a  co-operating 

324 


ECONOMIC  LIBERTY 

political  organization,  we  have  disaster  in  the 
form  of  anarchy.  Whenever  unbridled  pride  of 
opinion,  spurred  on  by  ignorance,  drives  men  to 
impose  unlegislated  theory  by  force  upon  others, 
a  would-be  irreconcilable  force  meets  the  inevi- 
table forces  of  government — whether  it  be  in  na- 
ture democratic  or  absolute — and  a  catastrophe 
ensues.  The  world  stops  until  an  adjustment  is 
made.  Thus  we  have  come  to  learn  that  indi- 
viduals secure  the  largest  liberty  only  under  some 
restrictions  of  law.  This  is  only  another  way  of 
saying  that  the  expressed  will  of  society  as  a 
whole  must  dominate  the  will  of  smaller  fractions 
to  the  end  that  all — irrespective  of  differences  in 
education  and  intelligence,  differences  in  material 
possessions,  differences  in  ways  of  thinking  and 
class  inheritances,  differences  in  moral  codes — 
may  obtain  a  larger  liberty  than  is  compatible 
with  the  attempt  of  the  few  to  enforce  individual 
opinions  upon  others. 

Our  social  problem,  likewise,  shows  similar  op- 
posing tendencies.  The  interests  of  economic  fac- 
tors like  capital  and  labor,  absolutely  different 
in  nature,  are  irrevocably  mated  by  the  necessity 
of  using  them  in  production  to  supply  our  neces- 
sary wants;  and  unless  co-operation  is  reached 

325 


LATTER-DAY  PROBLEMS 

between  the  two  seemingly  irreconcilable  forces, 
there  arises  the  inevitable  economic  tragedy.  In 
attempts  at  adjustment  the  raw  self-importance 
and  rigidity  of  the  ignorant  mind  —  too  often  led 
by  fanatics  who  masquerade  under  the  fair  name 
of  idealists  —  are  certain  to  end  in  tragedy.  Con- 
ceit of  opinion  in  economics  is  generally  in  in- 
verse ratio  to  intelligence  and  knowledge.  Where- 
withal, then,  shall  we  be  fed  on  wisdom?  Is 
Democracy,  political  or  industrial,  to  be  our 
Moses?  "The  common  sense  of  the  masses," 
says  George  Brandes,  "and  their  sharp  eye  for 
right  and  wrong  have  never  been  anything  but 
a  democratic  legend.  The  masses  believe,  as  a 
rule,  any  lie  that  is  given  to  them  in  an  agreeable 
form."  Is  industrial  democracy,  then,  headed  for 
tragedy  or  for  disciplined  co-operation  between 
what  seem  to  many,  within  each  of  the  opposing 
camps,  irreconcilable  forces?  In  our  search  for 
truth  do  we  find  economic  liberty  as  the  equiva- 
lent of  industrial  democracy? 


Long  ago  our  race  fought  for  and  won  the  right 
of  religious  liberty.  No  hierarchy  or  state  shall 
be  allowed  to  interfere  with  the  right  of  each  in- 

326 


ECONOMIC  LIBERTY 

X* 

dividual  to  select  his  code  of  ethics  or  to  worship 
as  his  conscience  dictates.  Protection  has  been 
secured  even  to  the  so-called  witch  who  worships 
the  divinity  in  a  black  cat.  Freedom  of  religious 
belief  secures  a  safe  field  within  which  may  be 
developed  that  which  has  spiritual  efficiency, 
whether  it  be  the  worship  of  duty  or  of  the  "Un- 
known God."  It  is  the  right  of  the  individual  to 
freedom  of  thinking;  it  is  a  form  of  extreme  in- 
dividualism in  respect  of  religious  beliefs.  It 
does  not  need  the  lion  of  Androcles  to  show  us 
what  has  been  won  since  the  days  of  the  Roman 
empire. 

Moreover,  from  the  barons  of  Runnymede  to 
the  present  tune  our  race  has  been  hewing  its  way 
with  battle-axe  and  sword,  by  argument  and  by 
withholding  grants  of  money,  to  political  liberty. 
Perhaps  the  fighting  is  not  yet  ended.  Lord  Acton 
had  felt  the  need  of  devoting  his  life  to  the  col- 
lection of  a  great  library  showing  the  history  of 
the  struggle  for  political  liberty.  This  struggle 
gave  us  the  French  and  the  American  Revolutions; 
and  we  are  still  required  to  fight  the  "political 
boss,"  who  has  as  many  heads  as  the  reformers 
have  spurts  of  energy.  The  love  of  political  lib- 
erty has  led  many  fine  spirits  to  meet  death,  with 

327 


LATTER-DAY  PROBLEMS 

a  smile,  on  the  battle-field  or  on  the  scaffold.  This 
inborn  craving  of  man  is  above  all  material  con- 
siderations: 

"Give  me  again  my  hollow  tree, 
A  crust  of  bread,  and  liberty." 

It  was  the  demand  for  equality  before  the  law 
and  for  equal  justice  to  all,  high  or  low.  Against 
this  indomitable  force  was  arrayed  the  selfish 
greed  of  power  and  ambition.  In  the  very  nature 
of  man  these  opposing  forces  were  irreconcilable, 
and  tragedy  followed:  butchery,  revolutions, 
conquests  of  empires,  and  the  tottering  of  abso- 
lutism mark  the  course  of  that  tragedy  down  to 
the  present  blood-drenched  fields  of  Europe. 
Sooner  or  later  constitutionalism  and  political 
liberty  must  come  to  announce  the  adjustment 
between  these  conflicting  forces  of  human  nature. 
Political  liberty  is  not  a  mere  compact;  it  must 
become  an  accepted  state  of  mind. 

Then  we  take  another  step.  After  having  won 
religious  liberty,  and  having  largely  established 
the  principles  of  political  liberty,  the  economic 
struggles  of  the  day  have  brought  forth  a  demand 
for  economic  liberty.  Since  the  word  "  democ- 
racy" stands  forth  in  the  struggle  for  political 

323 


ECONOMIC  LIBERTY 

liberty  as  opposed  to  inequality  and  injustice, 
the  new  gospel  is  sometimes  expressed  in  the  de- 
mand for  "industrial  democracy."  Obviously, 
political  liberty  has  had  much  to  do  in  bringing 
about  economic  liberty:  protection  by  the  state 
of  life  and  property,  safety  of  travel  and  trans- 
portation, justice  and  equal  treatment  in  the 
courts  of  law,  absence  of  official  castes,  and  free- 
dom in  choice  of  occupations  and  places  of  resi- 
dence have  been  the  necessary  prerequisites  for 
industrial  and  commercial  development.  But 
while  dependent  on  these  conditions  precedent, 
economic  liberty  differs  essentially  from  political 
liberty;  indeed,  it  deals  with  things  of  another 
kind.  It  is  impossible  to  argue  from  the  truths 
of  political  liberty  to  conclusions  as  to  economic 
liberty.  For  instance,  because  one  man  is  the 
political  equal  of  another,  it  cannot  be  reasoned 
that  one  man  is  the  industrial  equal  of  another. 
While  all  are  equal  before  the  law,  some  of  us 
may  be  mechanical,  some  artistic,  some  poets, 
some  stodgy,  some  unsystematic,  some  orderly, 
some  lazy,  some  industrious,  some  emotional,  some 
cool-headed,  some  foolish,  some  sensible,  some 
unpractical,  some  skilled  in  knowledge  of  men 
and  hi  management  of  financial  and  business  af- 

329 


LATTER-DAY  PROBLEMS 

fairs.  There  are  as  many  differing  industrial 
capacities  as  there  are  different  persons.  That  is, 
there  is  no  such  thing  as  economic  equality  among 
men;  they  differ  physically,  morally,  and  indus- 
trially. They  are  no  more  alike  than  all  lands,  or 
all  trees,  are  alike.  Men  differ  industrially  as 
much  as  a  stony  New  England  pasture  differs 
from  a  cotton-field  in  the  Mississippi  delta;  or 
as  much  as  the  level  prairie  of  Illinois  differs 
from  the  orchard  and  bench  lands  of  the  Bitter 
Root. 

Then  what  is  economic  liberty?  After  the 
emancipation,  many  negroes  believed  that  polit- 
ical liberty  meant  license.  So  to  many  casual 
minds  economic  liberty  seems  to  mean  economic 
license  or  freedom  from  effort;  the  grant  by  some 
power  outside  of  themselves  of  economic  satis- 
factions which  will  maintain  them  without  labor 
and  sacrifice;  or,  if  they  must  labor,  assurance  of 
a  return  to  which  they  have  a  right  independent 
of  their  industrial  efficiency.  Society  has  long 
ago  decided  that  every  one  born  into  the  world 
has  a  right  to  be  kept  from  starvation;  and  our 
poor  laws  have  long  stood  as  tangible  proof  of 
this  disposition.  But  society  has  never  yet  as- 
sumed that  those  who  will  not  work,  or  those  who 

330 


ECONOMIC  LIBERTY 

are  inferior  in  industrial  capacity,  shall  be  sup- 
plied from  the  production  of  others  with  satis- 
factions measured  only  by  the  desires  of  the  easily 
tired.  It  has  been  generally  assumed  that  virility 
and  manhood  can  be  gamed  only  by  effort  and 
self-sacrifice,  and  that  attaining  rewards  without 
them  results  in  an  invertebrate  man.  There  is 
kept  hi  mind  the  old  maxim  of  the  gardener: 
"The  shaken  tree  bears  the  more  fruit."  Shall 
we  find  the  paradox  in  economic  liberty,  too,  and 
learn  that  undisciplined  desire  must  be  met  by 
the  restraint  of  law?  Have  we  been  placed  on  the 
globe  in  such  an  environment  that  we  can  enlarge 
our  satisfactions  only  by  the  exercise  of  homely 
virtues  such  as  forethought,  self-control,  indus- 
try, sobriety,  thrift,  persistence,  and  good  judg- 
ment? There  is,  on  the  one  hand,  the  yearning 
for  the  flesh-pots;  and  yet  there  is,  on  the  other, 
the  wine-press  first  to  be  trodden.  Are  these  op- 
posing forces  irreconcilable,  to  be  followed  by  the 
inevitable  tragedy?  Or,  shall  we  learn  the  true 
way  of  adjustment  based  on  economic  laws? 
How  shall  we  gain  that  economic  liberty  under 
which  each  individual  shall  obtain  the  largest 
returns  from  his  own  industrial  efforts?  Is  there 
any  other  solution,  in  the  main,  than  that  liberty 


LATTER-DAY  PROBLEMS 

which  shall  offer  as  an  incentive  to  each  the  larg- 
est individual  activity  and  freedom  of  choice 
consistent  with  the  rights  of  his  fellows? 

in 

To  some  minds  industrial  democracy  is  fitted 
to  bring  us  "social  justice."  In  the  fierce  indus- 
trial competition  of  the  day  what  is  "social  jus- 
tice"? When  the  petted  cat  of  the  household  is 
fighting  against  the  stray  of  the  wood-pile,  what 
is  justice  between  them?  When  one  producer  of 
small  equipment  is  fighting  against  a  large  pro- 
ducer who  can  produce  more  cheaply,  is  it  justice 
to  the  consumer  to  handicap  the  large  producer 
so  that  a  higher  price  will  allow  the  small  pro- 
ducer to  stay  in  the  market?  Or  has  any  man — 
even  the  small  producer — a  droit  au  commerce? 
He  has,  of  course,  a  right  equal  to  that  of  any 
other  to  enter  trade;  but  it  is  never  true  that  men 
have  equal  success  in  trade.  What  is  social  jus- 
tice here?  Is  it  the  attempt  to  equalize  human 
capacities  by  handicapping  the  superior?  There 
is  no  need  of  arguing  about  such  a  proposal. 
Why  "break  a  butterfly  on  a  wheel"?  It  is  not 
in  the  power  of  society  to  equalize  the  industrial 
capacities  of  men;  it  may  at  the  best  educate  and 
train  the  differing  capacities  already  marking 

332 


ECONOMIC  LIBERTY 

out  one  man  from  another.  Pear-trees  may  be 
improved;  but  no  art  of  man  can  make  a  pear- 
tree  bear  roses.  Deep  down  in  nature  there  is 
some  formative  power  which  fixes  the  individual- 
ity of  a  strain,  just  as  it  sets  a  characteristic  qual- 
ity on  the  combination  of  traits  forming  each 
separate  man. 

It  cannot  be  made  too  clear,  moreover,  that 
distribution  of  wealth  has  to  do  with  material 
rewards,  and  that  these  rewards  must  justly  bear 
some  relation  to  the  respective  services  rendered 
in  production;  There  is  a  vast  difference  between 
well-being  and  well-living.  Obviously,  efforts  of 
an  aesthetic  or  spiritual  character — although  they 
rank  far  above  material  things  in  the  scale  of 
social  values — are  not  in  the  same  class  with  ma- 
terial rewards;  so  that  the  services  of  men  in  ma- 
terial production  are  supposedly  to  be  rewarded 
in  the  main  by  material  returns.  Therefore,  quite 
irrespective  of  man's  goodness  or  piety  (except 
so  far  as  it  affects  his  industrial  quality)  he  goes 
into  industry  for  material  recompenses.  If,  then, 
men's  services  in  the  production  of  wealth  are 
widely  unequal,  it  is  impossible  to  expect  that 
the  material  rewards  for  these  services  can  ever 
be  equal. 

In  short,  differences  in  wealth  are  founded  in 
333 


LATTER-DAY  PROBLEMS 

the  very  nature  of  men  as  we  find  them  in  this 
world.  It  cannot,  therefore,  be  supposed  that 
"social  justice"  purposes  to  bring  in  an  era  of 
equal  industrial  shares.  Nor  is  it  possible  to  sup- 
pose that  "industrial  democracy"  can  ever  aim 
at  equality  of  earthly  possessions,  so  long  as  dis- 
similar and  imperfect  men  remain  what  they  are. 
Since  discussions  of  riches,  of  wages,  of  industrial 
shares  belong  to  a  materialistic  philosophy  (in 
whose  groves  socialists  also  walk  and  discuss),  it 
may  make  some  of  us  glory  in  the  distinction  that, 
although  our  powers  in  acquiring  material  re- 
wards are  poor  indeed,  we  may  acquire  merit  in 
digging  for  treasures  in  other  than  materialistic 
realms. 

IV 

What,  then,  may  we  expect  "industrial  democ- 
racy "  to  usher  into  this  world  of  material  rewards  ? 
It  is  impossible  to  suppose  that  skill — natural  or 
acquired — should  receive  the  same  reward  as  lack 
of  skill,  under  any  meaning  attributed  to  "social 
justice."  Since  we  cannot,  however,  blink  the 
industrial  inequalities  of  men  and  their  rewards, 
it  may  be  urged  that  all  men  should  have  equal 
opportunities  hi  industry, 

334 


ECONOMIC  LIBERTY 

"Turning,  for  them  who  pass,  the  common  dust 
Of  servile  opportunity  to  gold." 

We  must  not  omit  to  point  out,  however,  that 
the  ability  to  see  an  opportunity  is  a  personal 
quality  granted  to  some  and  denied  to  others. 
As  Bagehot  says,  it  is  not  enough  to  have  oppor- 
tunity, it  is  essential  to  feel  it.  Stating  the  mat- 
ter baldly,  at  this  very  moment  to  every  reader 
there  is  equal  industrial  opportunity;  but  not 
every  one  of  us  is  equally  able  to  see  an  opportu- 
nity when  it  is  presented.  Perhaps  what  the  well- 
wishers  of  the  race  mean  by  insisting  on  equal 
opportunity  is  the  training,  insight,  experience, 
and  nerve  to  see  and  take  the  risks  of  opportu- 
nity. That  is,  they  would  like  to  see  something 
akin  to  equality  in  industrial  foresight;  the  dis- 
tance to  which  for  the  social  reformer  is  farther 
than  to  Tipperary. 

But  perhaps  this  is  a  man  of  straw.  There  must 
be  something  more  than  this  in  the  dissatisfaction 
of  men  with  their  present  industrial  opportuni- 
ties. It  is  no  doubt  felt  that  artificial  advan- 
tages place  one  man  in  a  position  of  opportunity 
and  shut  another  out.  For  instance,  it  may  be 
thought  that  a  parent's  wealth  gives  his  son  an 
advantage  in  the  competitive  struggles  of  indus- 

335 


LATTER-DAY  PROBLEMS 

try.  On  the  contrary,  wealth  and  the  grant- 
ing of  every  desire  for  comfort  and  luxury  is  the 
very  destruction  of  fibre  and  constructive  energy. 
Phillips  Brooks  once  said  to  me  of  a  young  man: 
"He  has  the  disadvantage  of  being  rich."  In 
short,  it  is  not  the  most  expensive  rod  that 
catches  the  most  trout. 

For  generations  we  have  heard  much  of  the 
"Rights  of  Man";  but  all  through  the  French 
Revolution,  as  De  Tocqueville  has  declared,  lib- 
erty was  confounded  with  equality.  Of  course,  he 
was  referring  to  political  liberty  and  equality. 
On  the  other  hand,  in  our  groping  for  industrial 
democracy  it  is  possible  that  we  are  guilty  of  the 
same  lack  of  discrimination  in  assuming  that 
economic  liberty  connotes  economic  equality. 
Now,  if,  as  has  been  shown,  there  is  no  such  thing 
as  economic  equality,  then  to  assume  that  there 
can  be  no  economic  liberty  without  economic 
equality  is  to  deny  the  very  existence  of  such  a 
thing  as  economic  liberty — a  conclusion  we  can- 
not accept  for  a  moment.  But,  whatever  our 
theorizing  about  economic  liberty  may  be,  we 
almost  instinctively  include  in  the  concept  equal 
opportunity  in  industry.  There  is,  of  course,  the 
obvious  hindrance  of  custom  and  habit  which 

336 


ECONOMIC  LIBERTY 

restricts  competition  so  that,  as  in  the  case  of 
women's  wages,  unequal  opportunity  makes  for 
injustice.  No  restriction,  legal  or  artificial,  ought 
to  be  allowed  to  interfere  with  the  equal  oppor- 
tunity to  enter  industry,  to  choose  the  occupation, 
to  rise  as  skill  and  merit  warrant,  to  have  equal 
rights  to  property  and  life,  and  to  protection 
from  the  state  in  all  industrial  operations.  The 
demand  for  equal  opportunity,  however,  is  in 
essence  a  demand  for  a  regime  of  free  competi- 
tion. Equal  opportunity,  in  effect,  is  a  way  of 
giving  unequal  capacities  free  play  to  obtain  un- 
equal industrial  returns. 


When  the  goods  of  any  producer  can  enter  a 
given  market,  without  interference  or  restriction 
of  any  kind,  we  say  that  is  a  competitive  market. 
Likewise,  if  there  is  a  free  movement  of  labor  or 
capital  into  or  out  of  any  productive  area,  we 
agree  that  there  is  free  competition.  That  is, 
labor  and  capital  are  given  equal  opportunities  to 
enter  that  field.  Yet  socialism,  in  its  very  foun- 
dation, is  opposed  to  free  competition;  and  so, 
of  course,  it  is  directly  opposed  to  equal  oppor- 
tunity. Why?  Because  the  differing  industrial 

337 


LATTER-DAY  PROBLEMS 

capacities  of  men  inevitably  lead  to  differing 
shares  of  material  possessions  whenever  all  men 
are  given  equal  opportunities  to  exercise  their 
several  and  unequal  powers.  Socialism,  there- 
fore, is  a  protest  against  unequal  shares  of  ma- 
terial wealth,  on  the  ground  that  the  only  way 
to  avoid  that  result  is  to  avoid  free  competition 
and  equal  opportunity  for  unequal  abilities. 
Having  failed  in  the  field  of  free  and  equal  con- 
test of  abilities,  the  socialist  retreats  behind  the 
sheltering  skirts  of  the  protecting  and  paternalis- 
tic state  and  asks  for  special  favors  from  society. 
His  is  a  gospel  of  inadequacy.  More  than  that, 
it  is  opposed  to  "social  justice,"  if  that  justice 
includes  equal  industrial  opportunity. 

Most  socialists  have  come  to  then*  conclusions 
through  an  abounding  idealism  and  sympathy 
with  the  sufferings  of  their  kind.  From  the  days 
of  Marx  and  Lasalle,  men  have  gone  into  social- 
ism not  from  first  having  made  a  profound  study 
of  economics,  but  from  first  having  had  a  vision  of 
perfection  in  socialism  for  which  they  have  after- 
ward sought  to  find  an  economic  justification. 
Indeed,  the  basic  incentives  to  socialism  are  a 
dissatisfaction  with  the  existing  industrial  order, 
a  desire  for  industrial  equality,  a  wish  to  escape 

338 


ECONOMIC  LIBERTY 

the  merciless  tests  of  free  competition,  and  a 
hearty  respect  for  the  uses  of  capital.  There  is 
a  bitter  sense  of  inequality  due  to  the  fact  that 
some  have  capital  and  others  not;  and  it  is  seen 
that  the  possession  of  capital  gives  access  to  tools, 
employment,  and  power  over  the  future.  More 
than  that,  we  know  by  actual  experience  how 
merciless  is  the  working  of  many  a  capitalist's 
mind  when  he  is  thinking  only  of  getting  income 
from  his  business.  That  men  are  supposed  to 
have  an  unequal  chance  at  capital,  and  therefore 
are  under  the  tyranny  of  capitalists,  is  a  trite  in- 
dictment against  the  regime  of  free  competition. 
But  in  the  demand  for  the  state  ownership  of 
capital  lies  the  fundamental  non  sequitur  of  social- 
ism— a  violation  of  equal  opportunity  and  social 
justice.  Capital  is  not  a  gift  of  nature;  nor  can 
it  be  a  creation  of  the  state  in  any  other  way  than 
through  the  effort  of  individuals.  It  is  a  man- 
willed,  a  man-originating  resultant.  In  its  legiti- 
mate character  it  is  the  outcome  of  the  psychic 
efforts  of  individual  persons.  Treble  the  effi- 
ciency of  production,  treble  the  output  of  wealth, 
and,  if  you  treble  that  kind  of  consumption  by 
which  nothing  is  produced  in  the  place  of  that 
which  is  consumed,  there  is  no  addition  to  capi- 

339 


LATTER-DAY  PROBLEMS 

tal.  Only  by  calling  on  the  individual  for  the 
moral  force  that  sets  a  greater  gain  on  a  future 
use  than  on  a  present  indulgence  do  we  change 
wealth  into  capital.  Capital  is  the  outcome  of 
self-control,  foresight,  a  power  to  estimate  the 
future  over  the  present.  You  may  take  away 
wealth  from  others  by  highway  robbery,  by 
fraud,  by  "high  finance,"  but  you  do  not  thereby 
create  capital.  If  the  socialistic  state  then  pro- 
poses to  take  capital  from  those  by  whom  it  was 
created  and  assign  it  to  those  unwilling  or  unable 
to  exercise  the  qualities  by  which  it  is  brought 
into  existence,  it  is  flying  in  the  face  of  social  jus- 
tice, because  it  is  taking  from  those  who  are  in- 
dustrially competent  and  giving  without  service 
to  those  who  are  industrially  incompetent;  be- 
cause it  is  not  assigning  economic  rewards  on  the 
basis  of  the  service  rendered.  It  does  not  con- 
done the  preliminary  confiscation  of  individual 
capital  to  say  that,  after  the  state  gets  posses- 
sion of  all,  or  nearly  all,  the  capital  of  society, 
the  state  will  set  itself  to  the  task  of  saving  future 
capital.  If  socialism  is  in  its  theory  economically 
and  ethically  so  indefensible,  what  could  we  ex- 
pect of  its  practical  operation  by  its  well-inten- 
tioned, visionary  type  of  votaries?  The  obvious 

340 


ECONOMIC  LIBERTY 

right  of  each  of  us  to  labor  according  to  our  own 
preferences  also  carries  with  it  the  obvious  right 
to  save  and  to  be  protected  in  the  use  of  our  sav- 
ings— provided  we  do  not  infringe  on  the  rights 
of  others  to  do  the  same. 

The  selfish,  evil  nature  of  man  shows  itself  in 
the  control  of  capital  just  as  in  the  control  of  any 
other  power,  political  or  industrial.  Large  pro- 
ducers do  not  hesitate  to  combine  their  efforts  to 
gain  special  legislation  for  the  purpose  of  obtain- 
ing special  industrial  privileges.  Virtue  and  civic 
honor  are  by  no  means  confined  to  the  rich.  But 
it  is  folly  to  assume  that  because  some  capital 
has  not  been  justly  accumulated,  some  gained 
by  privilege,  some  not  earned  but  inherited,  that 
capital  in  general  can  be  lightly  confiscated  by 
the  state.  The  vast  mass  of  existing  capital  has 
come  into  existence  by  the  exercise  of  the  homely 
virtues  I  have  described.  Confiscate  the  results 
of  the  exercise  of  these  virtues,  and  you  not  only 
destroy  the  virtues  themselves  but  you  bring 
about  an  anaemic,  self-indulgent  society. 

VI 

But  why  so  much  in  favor  of  property  rights? 
We  are  pointedly  asked  to  set  a  higher  value 

341 


LATTER-DAY  PROBLEMS 

on  human  rights.  They  certainly  are  of  higher 
significance.  Indeed,  property  and  legal  rights 
should  only  reflect  the  human  rights  of  members 
in  society.  When  a  careful,  thrifty,  hard-work- 
ing farmer  with  two  children  painfully  accumu- 
lates sleek  cattle  and  good  implements  in  neat, 
well-painted  buildings,  he  forms  an  unhappy  con- 
trast to  the  slack  laborer  near  him  who  lives  in 
a  pigsty  with  a  dozen  slatternly  children.  The 
latter  is  selected  as  a  type,  not  of  all  laborers, 
but  of  a  special  kind  near  the  moral  bottom.  Our 
sympathy  with  the  "under  dog"  makes  us  all 
want  "human  rights"  for  the  latter.  Should 
society  take  fat  cattle  away  from  the  one  and 
thereby  feed  the  other?  Are  not  human  rights 
superior  to  property  rights?  The  troublesome 
truth  is  that  by  confiscating  one  man's  capital, 
painfully  accumulated,  society  disregards  his  hu- 
man rights;  and  if  it  supplies  the  wants  of  a  too 
large  family  without  reference  to  industrial  ser- 
vices it  is  removing  all  motive  for  self-control 
and  thrift.  He  must  not  be  allowed  to  starve? 
Certainly  not;  but  society  should  levy  on  all  its 
members  for  a  poor  fund,  and  not  on  the  one 
thrifty  neighbor,  even  though  he  happens  to 
employ  him.  Industrial  democracy  here  cannot 

342 


ECONOMIC  LIBERTY 

mean  equal  possessions,  because  the  men  are 
unequal  in  thrift  and  industry;  and  equality  of 
treatment  demands  that  the  thrifty  farmer  should 
have  the  advantage  of  human  rights  as  well  as 
the  denizen  of  the  pigsty.  If  the  milk  in  this 
cocoanut  is  that  in  a  vague  way  human  rights 
are  supposed  to  connote  equal  rewards,  then  the 
intellectual  acumen  of  this  philosophy  is  on  a  par 
with  the  tooting  of  a  baby's  horn. 

But  why  not  form  a  union  of  all  such  laborers 
who  will  agree  to  work  only  for  wages  enough  to 
support  a  large  family,  with  a  margin  for  com- 
forts, and  to  prevent  all  others  from  competing 
in  their  district?  This  is  coercion  by  conspiracy 
in  the  form  of  an  artificial  monopoly;  it  is  not  fit 
that  a  union  should  wish  to  prevent  non-union 
laborers  from  the  human  right  to  work  and  thus 
deny  equal  opportunity  and  social  justice  to 
others.  If  perchance  a  union  were  formed  in- 
cluding all  laborers,  society  would  be  freed  from 
a  poor  fund  and  the  burden  be  deftly  transferred 
to  the  employers  of  the  district,  who  thus  become 
almoners  for  the  community.  Such  a  plan  could 
not  possibly  be  regarded  as  a  logical  sanction  of 
human  rights.  But  to  remove  all  doubts  as  to 
ethics  and  logic,  pass  a  law  fixing  the  rate  men- 

343 


LATTER-DAY  PROBLEMS 

tioned  as  a  legal  minimum  rate  of  wages,  so  as  to 
relieve  society  as  a  whole  of  its  duty,  thus  impos- 
ing the  burden  on  the  chance  employer,  and  the 
principle  of  justice  is  then  established  beyond 
peradventure ! 

Whatever  the  economic  futility  of  such  think- 
ing, we  cannot  escape  the  very  pertinent  fact  that 
all  of  us  are,  deep  down  hi  our  hearts,  more  inter- 
ested in  the  man  of  the  pigsty  and  his  slatternly 
children  than  in  the  thrifty  and  successful  farmer. 
It  is  due  to  the  saving  grace  of  human  sympathy 
which  is  above  and  beyond  all  logic  and  reason. 
The  thrifty  man  can  and  will  take  care  of  himself; 
the  man  of  the  pigsty  is  the  real  problem  of  in- 
dustry. 

The  unhappy  thing  in  the  situation  is  too  often 
the  low  ethical  code  of  the  owner  of  capital.  In 
the  war  of  interests  he  will  often  rival  a  labor 
union  in  resorts  to  abuses  of  power  to  gain  a 
selfish  end.  But  we  must  remember  that  we  are 
indicting  the  owner  of  capital,  not  capital  itself. 
Moral  condemnation  must  fall  on  men,  not  on 
impersonal  agents.  However  we  may  cauterize 
the  capitalist,  capital  remains  a  beneficent  and 
necessary  condition  of  progress  for  all  members 
of  society. 

344 


ECONOMIC  LIBERTY 

It  is  worth  noting,  however,  that  the  personal 
process  of  saving  on  the  part  of  one  man  does  not 
interfere  with  that  of  another.  Capital  is  legiti- 
mately accumulated  without  being  accumulated 
at  the  expense  of  another's  capital.  We  should 
not  charge  the  evil  that  men  do  to  the  social  sys- 
tem. Thus  we  get  a  concept  of  economic  liberty 
for  the  individual  which  does  not  trench  on  the 
rights  of  others.  On  the  contrary,  saving,  like 
smallpox,  is  contagious;  and  vaccination  against 
it  ought  to  be  forbidden.  All  the  analysis  of 
economics  and  all  the  resources  of  psychology 
should  be  directed  to  the  means  of  raising  the 
level  of  lif  e  of  the  man  at  the  bottom.  That  goes 
without  saying.  That,  however,  is  only  another 
way  of  saying  that  his  problem  is  not  solved  by 
dragging  down  the  motives  for  economy  and  skill, 
but  by  trying  to  create  those  motives  also  in  the 
man  of  the  pigsty  and  thereby  to  enlarge  his  in- 
dustrial efficiency.  That  is  the  kind  of  human 
rights  we  wish  to  provide  him  with. 

VII 

In  the  open  book  of  human  nature  we  have 
much  to  learn.  Continually  we  meet  the  hard 
task  of  adjustment  between  conflicting  human 

345 


LATTER-DAY  PROBLEMS 

forces  so  as  to  avoid  tragedy.  Nimble  wits  and 
scant  logic  often  go  together.  It  is  easier  to  act 
without  thinking  and  (like  the  politicians)  es- 
cape before  consequences  overtake  us.  It  is  said 
that  rabbits  are  great  jumpers  but  not,  therefore, 
great  legislators.  It  becomes  us,  therefore,  to  go 
through  the  forbidding  process  of  thinking — so 
far  as  we  are  able.  In  these  days  of  gluttonous 
emotion  we  are  invited  into  methods  which  save 
foresight  and  thinking.  We  must  try  to  think 
through  to  the  end. 

To  this  point,  we  have  not  yet  faced  the  real 
reason  which  probably  underlies  the  wide-spread 
belief  in  the  possibilities  of  industrial  democracy. 
Among  the  unsuccessful  it  seems  to  be  the  pillar 
of  cloud  by  day  and  the  pillar  of  fire  by  night 
which  will  lead  them  to  the  promised  land  of  eco- 
nomic ease.  It  is  believed  by  many  that  the  ex- 
isting laws  of  distribution  are  unjust;  that  when 
one  human  being  works  long  hours  for  $500  or 
$600  a  year,  while  another  has  $100,000  a  year, 
there  is  something  wrong  in  the  social  system. 
Hence,  let  us  throw  bricks,  blow  up  buildings, 
and  overturn  existing  political  institutions  in  or- 
der to  reform  the  world.  Unhappily,  such  meth- 
ods only  bring  on  tragedy;  and  the  problem  re- 

346 


ECONOMIC  LIBERTY 

mains  unsolved.  Not  comprehending  the  personal 
origin  of  capital,  it  is  assumed  that  capital  is  ac- 
cumulated at  the  expense  of  wages,  that  large 
wealth  is  necessarily  won  by  fraud  or  special  priv- 
ilege (even  though  wealth  is  sometimes  won  by 
fraud  and  special  privilege),  and  that  the  only 
hope  of  labor  in  the  tug  of  war  is  to  seize  all  that 
can  be  pulled  away  from  the  employer.  There  is 
no  use  blinking  the  fact  that  organizations  of 
business  men  plan  to  elect  Presidents  and  mem- 
bers of  Congress,  not  to  obtain  the  enactment  of 
laws  for  the  good  of  society  as  a  whole,  but  to  in- 
trench themselves  behind  some  special  privilege. 
Such  knowledge  creates  hatred  of  the  capitalist 
class;  but  the  wiping  out  of  special  privilege  will 
not  solve  the  problem  before  us.  It  does  not  do 
here  to  prate  hackneyed  words  about  co-opera- 
tion between  labor  and  capital.  The  solution  is 
not  political  nor  economic,  but  ethical.  The 
truth  is  that  ethical  changes  hi  the  motives  and 
dealings  of  men  directly  touch  their  relative  ma- 
terial rewards. 

But  economic  analysis  must  precede  ethical 
reform.  Roads  must  be  made  before  we  can 
bring  in  civilization.  It  begins  to  be  recognized 
that  our  economic  life  is  influenced  not  only  by 

347 


LATTER-DAY  PROBLEMS 

the  limitations  of  natural  resources  but  also  by 
the  imperfections  of  mankind.  Scarcity  affects 
all  things  of  value.  To  get  them  we  have  to  over- 
come productive  obstacles.  Fertile  land  is  not 
unlimited;  tin,  iron,  zinc  must  be  mined.  Capi- 
tal is  limited  directly  by  the  personal  ability  to 
estimate  the  future  over  the  present,  and  it  pro- 
vides invention  with  marvellous  tools  of  efficiency. 
But  labor  comes  forward  in  supply  for  physio- 
logical reasons  quite  unrelated  to  productive  de- 
mand. Labor  is  of  all  kinds  of  industrial  intelli- 
gence and  efficiency.  The  largest  numbers  settle 
in  the  unskilled  class,  and  yet  these  render  the 
least  service  to  production.  On  that  account  the 
demand  is  less  intense,  and  the  numbers  are  larger, 
than  for  higher  classes  of  laborers.  We  cannot, 
by  legislation  or  sympathy,  prevent  scarcity  or 
abundance  from  having  an  effect  on  wages  any 
more  than  we  can  prevent  certain  trees  from 
shedding  their  leaves  in  whiter.  Nor  is  it  of  any 
more  use  to  say  that  the  results  of  such  princi- 
ples are  unjust  than  to  say  that  the  weather  is 
unjust.  If  men  who  can  take  grave  responsibili- 
ties are  scarce  and  if  the  demand  for  them  is  im- 
perative, they  may  be  paid  $100,000  a  year;  and 
if  men  who  can  do  only  ordinary  tasks  are  nu- 

348 


ECONOMIC  LIBERTY 

merous,  while  the  demand  for  them  is  not  strong, 
their  wages  will  be  low.  Simply  to  say  that  men 
cannot  live  on  those  low  wages  as  decently  as  we 
think  they  ought  does  not  in  itself  raise  them.  No 
matter  how  much  our  feelings  are  harrowed,  phi- 
lanthropy cannot  raise  wages  above  the  level  fixed 
by  impersonal  market  conditions.  The  function 
of  philanthropy  seems  to  be  to  ameliorate  the  lot 
of  the  unfortunate  and  unfit  during  the  period  of 
temporary  incapacity  or  during  the  long  interim 
before  they  acquire  increased  productivity. 
Hence  the  poor  are  likely  to  be  with  us  always. 
And  yet  the  idealism  of  industrial  democracy 
seems  to  hope  otherwise.  There  is  an  indefeasi- 
ble hope  to  bring  in  by  some  sort  of  miracle  an 
equality  hi  industrial  rewards,  or  something  better 
than  present  inequality. 

Without  doubt,  our  real  interest  is  in  the  prob- 
lem of  the  man  in  the  pigsty  and  his  slatternly 
children.  What  for  them  is  the  message  of  eco- 
nomic liberty  ?  We  know  that  many  of  the  forces 
bringing  about  low  wages  cannot  be  removed  by 
the  fiat  of  society.  The  theories  of  betterment 
must  frankly  admit  these  facts  and  must  be 
adapted  to  them.  But,  on  the  other  hand,  there 
are  open  to  society  methods  of  amelioration  en- 

349 


LATTER-DAY  PROBLEMS 

tirely  within  its  control.  These  are  largely  psycho- 
logical. The  wages  and  the  condition  of  the  man 
in  the  pigsty  can  be  raised  by  anything  which 
will  increase  his  productive  efficiency — sobriety, 
industry,  manual  and  mechanical  training,  edu- 
cation, and  self-control.  The  chief  work  must  be 
spent  on  the  slatternly  children,  who  should  be 
" caught  young"  and  given  a  better  environment 
as  well  as  all  the  advantages  of  trained  efficiency. 
Society  is  justified  in  using  all  its  sovereign  pow- 
ers in  building  up  some  means  of  developing  the 
personal  efficiency  of  each  child.  Thus  the  res- 
cue of  the  group  in  the  pigsty  may  be  accom- 
plished without  the  spoliation  of  the  thrifty  folk 
who  have  fat  cattle.  It  is  the  folly  of  superficial 
economic  thinking  to  suppose  that  the  progress 
of  the  one  is  at  the  expense  of  the  other.  Eco- 
nomic liberty  does  not  grant  to  the  man  of  the 
pigsty  industrial  license,  that  is,  the  raw  indi- 
viduality of  inefficiency,  laziness,  intemperance, 
and  ignorance  and  yet  allow  a  claim  to  the  re- 
wards of  efficiency.  He  is  to  gain  larger  con- 
sumption and  more  comforts  only  if  he  obeys  the 
laws  which  enable  him  to  gain  capital  and  pro- 
ductive efficiency;  and  if  he  develops  those  qual- 
ities he  will  also  obtain  higher  industrial  returns. 

350 


ECONOMIC  LIBERTY 

He  can  get  economic  liberty  only  under  economic 
law. 

We  are  thus  led  to  distinguish  between  two 
very  different  sets  of  wrongs.  It  is  far  from  sound 
to  assign  the  ills  that  men  are  heir  to  to  the  ex- 
isting social  and  economic  system.  Very  much  of 
this  system  has  its  basis  in  the  character  of  the 
earth  on  which  we  live  and  in  the  very  nature  of 
man  as  he  was  created.  It  is  not  correct  to 
charge  up  against  a  system  of  economic  distribu- 
tion thus  founded  the  wrongs  due  to  the  imper- 
fection of  man.  Wrongs  of  economic  institu- 
tions should  not  be  confounded  with  the  wrongs 
of  evil  human  nature.  A  bridge  thrown  across  the 
Niagara  River  is  neither  just  nor  unjust,  neither 
right  nor  wrong;  but  the  man  who  entices  an- 
other upon  it  in  order  to  throw  him  over  is  sub- 
ject to  moral  judgments.  It  is  not  going  too  far 
to  say  that  most  of  the  industrial  evils  com- 
plained of  to-day  are  not  to  be  attributed  to  a 
vicious  social  and  economic  system,  but  to  the 
bad  manifestations  of  sinful  human  nature.  The 
inference,  then,  is  obvious.  Discriminate  be- 
tween the  wrongs  assignable  to  the  social  system 
and  those  assignable  to  human  nature.  The  re- 
moval of  the  shocking  evils  in  our  midst  is  not  to 


LATTER-DAY  PROBLEMS 

be  accomplished  by  overturning  social  institu- 
tions, by  wiping  out  private  property,  or  by  deny- 
ing economic  distribution.  Even  if  you  could  do 
all  these  things,  you  would  still  have  the  same  old 
human  nature  at  work,  certain  to  be  the  source 
of  most  of  the  evils  we  now  endure.  The  only 
thing  that  counts  permanently  is  the  slow,  grad- 
ual, steady  uplifting  of  human  nature.  This 
must  be  the  main  objective  of  industrial  democ- 
racy. You  do  not  save  the  sinner  merely  by 
changing  his  coat.  We  wonder  that  the  church 
has  not  done  more  with  human  nature.  Could 
we  expect  more  from  socialism?  It  is  one  thing 
to  admit,  and  sympathize  with,  the  wretchedness 
all  about  us,  which  we  should  only  too  well  like  to 
eradicate  from  the  world.  It  is  quite  another 
thing — after  the  kingdom  of  Christ  has  been 
preached  for  twenty  centuries,  only  to  be  fol- 
lowed by  the  most  merciless  war  of  all  history — 
to  suppose  that  a  mere  scheme  for  the  confisca- 
tion of  capital  and  its  transfer  to  the  control 
of  the  state  will  bring  about  the  perfection  of 
man  and  exact  justice  for  all.  To-day,  as  in  the 
days  of  an  old  writer,  we  seem  to  be  obliged  to 
confess  that  "The  descent  to  Hades  is  the  same 
from  every  place." 

352 


ECONOMIC  LIBERTY 

VIII 

There  is,  therefore,  much  empty  declamation 
about  the  wrongs  of  our  social  system  and  much 
vague  longing  for  a  new  industrial  democracy. 
Raucous  noises  are  not  argument  and  dreams 
are  not  convincing  by  daylight.  The  problem  of 
economic  liberty  before  us  is  one  which  involves 
the  betterment  of  the  individuals  out  of  whom 
society  is  built  and  from  whom  society  takes  its 
color  and  characteristics.  Our  social  system  will 
be  as  good  as  the  individuals  of  whom  it  is  com- 
posed. 

Say  what  we  will,  in  our  search  for  economic  or 
political  liberty  we  come  back  to  the  individual. 
At  Tuskegee  or  in  the  slums  of  Chicago  we  have 
the  same  problem  of  stimulation  to  the  motives 
for  production  and  then  the  training  to  give  pro- 
ductive efficiency  for  supplying  a  larger  consump- 
tion and  a  higher  standard  of  living.  We  are 
again  met  with  the  necessity  of  making  an  ad- 
justment between  seemingly  irreconcilable  forces. 
On  the  one  hand,  we  cannot  grow  as  a  society 
without  a  healthy  growth  of  individual  energy. 
Every  possible  stimulus  should  be  given  to  the 
motives  which  impel  each  individual  to  enlarge 

353 


LATTER-DAY  PROBLEMS 

his  well-being.  You  cannot  have  a  good  field  of 
wheat  unless  after  the  sowing  the  separate  kernels 
of  wheat  germinate.  You  cannot  have  capital 
unless  separate  persons  save;  you  cannot  have 
labor  unless  individual  persons  work.  When 
Colbert  fixed  for  the  factories  of  France  the  size 
and  coloring  of  the  tapestries  they  might  make, 
he  hindered  the  development  of  individual  initia- 
tive which  might  have  originated  a  thousand  im- 
provements hardly  to  be  conceived  by  a  single 
ruling  mind,  no  matter  how  great.  There  is  the 
greatest  economic  liberty  hi  the  state  that  offers 
the  greatest  rewards  to  individual  activity,  con- 
sistent with  the  rights  of  others.  After  having 
framed  this  sentence,  I  found  the  following  state- 
ment by  a  well-known  jurist:  "Each  man  may 
develop  himself,  but  only  so  far  as  his  doing  so 
will  not  interfere  with  the  exercise  of  a  like  right 
by  others.  .  .  .  Liberty  .  .  .  insists  that  the  full 
development  of  each  individual  is  not  only  a  right 
but  a  duty  to  society,  and  our  best  hope  for 
civilization  lies  not  in  uniformity  but  in  differen- 
tiation. "  These  were  the  words  of  Justice  Bran- 
deis.  Indeed,  we  base  and  justify  private  prop- 
erty only  on  the  granting  to  each  individual  of 
the  results  of  his  own  exertions.  The  truth  which 

354 


ECONOMIC  LIBERTY 

lay  behind  the  much-abused  and  little-under- 
stood concept  of  laissez-faire  was  a  protest  against 
that  despotic  and  unwise  interference  with  pri- 
vate industrial  initiative  which  was  the  very  life 
of  industry,  and  the  restriction  of  which  in  the 
days  of  the  Grand  Monarque  withered  the  pros- 
perity of  the  nation.  In  effect,  only  that  govern- 
mental interference  is  justified  of  economic  liberty 
which  allows  the  greatest  industrial  freedom  to 
the  individual  within  the  field  of  equal  rights. 
As  the  state  interferes  with  highwaymen  so  that 
women  and  children  may  walk  our  streets  in 
safety,  so  it  may  rightly  interfere,  in  the  interest 
of  equality  of  opportunity  and  social  justice,  for 
instance,  not  only  with  selfish  organizations  of 
employers  which  ami  to  use  legislation  to  control 
prices,  but  also  with  excited  strikers  who  try  to 
prevent  other  laborers  from  working. 

On  the  other  hand,  while  individual  initiative 
is  as  necessary  to  economic  health  as  live  cells  in 
the  tree  are  necessary  to  leaves  on  the  boughs, 
economic  liberty  is  the  resultant  of  individual- 
ism under  the  curb  of  disciplined  co-operation 
in  society.  Raw  individualism  is  the  untamed 
bull  at  large;  disciplined  individualism  is  the  ox 
ploughing  corn.  To  inveigh  against  individual- 

355 


LATTER-DAY  PROBLEMS 

ism  is  like  denying  the  need  of  hydrogen  in  form- 
ing a  drop  of  water.  The  singling  out  of  one  fac- 
tor in  a  complex  combination  has  always  been  the 
mark  of  the  impetuous  enthusiast  whose  fiery 
spirit  burns  the  hotter  the  narrower  the  chimney 
of  his  mind.  In  the  beginning  God  seems  to  have 
created  all  men  as  individualists;  and  the  main 
history  of  the  race  in  its  social  contacts  is  a  story 
of  the  adjustment  between  the  vigor  and  initia- 
tive of  individualism  with  that  disciplined  co- 
operation by  which  alone  we  come  to  possess  in 
largest  measure  the  fruits  of  economic  liberty. 
If  God  made  us  all  individualists,  life  has  made 
us  all  co-operators.  While  there  is  the  greatest 
political  liberty  under  law,  so  there  is  the  greatest 
individual  economic  liberty  under  economic  law. 

In  our  industrial  life  we  are  continually  forced 
to  make  adjustments  between  seemingly  irrecon- 
cilable forces  in  order  to  avoid  tragedy.  We  are 
called  upon  for  intelligence,  training,  common 
sense,  and  sympathy.  In  bringing  in  the  reign  of 
liberty  under  economic  law,  we  must  needs  be 
patient  as  well  as  hopeful.  Remember  that  the 
June  sun  begins  to  come  north  in  December. 


356 


INDEX 


Addams,  Jane,  114. 
Anarchism,  60-6 1. 
Armstrong,  General,  67. 
Atchison,  Topeka  and  Santa  Fe 
Railway,  195. 

Barnett,  Samuel,  91,  92,  93. 

Brandeis,  Justice,  354. 

Brandes,  George,  326. 

Business  and  democracy,  297; 
business,  dangers  to,  308,  311, 
312,  316,  319;  business  men 
and  organization,  322. 

Capital,  law  of  increase  of,  126- 
128;  origin  of,  267-269,  272, 
296,  339,  348;  aids  in  conquest 
of  nature,  269;  destruction  of, 
in  Europe,  264;  monopoly  of, 
266,  274,  295,  339,  345;  to  be 
socialized,  311;  and  owner  of, 
to  be  distinguished,  344,  347; 
distinguished  from  capitalism, 
I37~i38;  and  socialism,  266. 

Capitalism,  265,  266,  271;  and 
social  discontent,  264;  capi- 
talistic forms,  evolution  of, 
268. 

Capitalization  of  earnings,  proper 
for  monopolies,  178. 

Carnegie,  178,  179,  180. 

Character,  affects  industrial  ef- 
ficiency, 84;  and  wages,  149- 
150;  and  economic  improve- 
ment, 151-153,  273. 

Christianity  a  test  of  economics, 
120-121;  aids  saving,  1 23-1 28. 


Collective  bargaining,  4,  22,  256; 
limitations  of,  6. 

Competition,  242,  337;  opposed 
by  Socialists,  28;  disadvan- 
tages of,  52.  See  Monopoly. 

Consumers'  leagues,  65-66,  71. 

Co-operation,  65,  355. 

Danbury  Hatters'  Case,  240,  280. 

Democracy,  296;  political,  299, 
308;  industrial,  300,  308,  309, 
312;  industrial  related  to  po- 
litical, 313,  339;  business  and 
democracy,  297. 

Denison,  Edward,  93. 

De  Tocqueville,  336. 

Distribution,  laws  of,  examined, 
134-148;  system  of,  to  be 
changed  by  socialism,  288, 
291;  by  industrial  democracy, 
309,320,346,353;  by  unions, 
278,  288;  why  some  are  em- 
ployers, 273,  275,  286;  why 
some  are  rich,  302;  cowboy 
case,  304-306. 

Economic  liberty,  324;  differs 
from  political,  329;  does  not 
mean  license,  330;  nor  equal- 
ity, 336. 

Economics  and  experience 
needed  for  social  work,  100. 

Ethical  code  of  workers  and  em- 
ployers, 116,  339,  341,  344. 

Ethics  related  to  economics,  117. 

Experience  not  sufficient  guide 
for  action,  98-99. 


357 


INDEX 


Farming,  suggested  industry  for 
city  poor,  74. 

Foreign  trade,  promoted  by  in- 
creased efficiency  of  labor,  23, 
248-252,  253;  an  incentive  to 
civilization,  70. 

Fortunes,  large,  hostility  to,  155; 
often  imply  large  service,  165, 
1 68;  wrongly  acquired,  170- 
171,  307;  viciously  used,  171- 
172;  well  used,  172;  regula- 
tion of  size  of ,  175. 

George,  Henry,  62,  63,  64, 198. 
Germany's     superior     technical 
schools,  79. 

Hirsch,  Baron,  165-165. 
Hughes,  Governor,  203. 

Individual  initiative,  310. 

Industrial  democracy,  299-301, 
308-310,  312,  320,  329,  332, 
334,  346;  and  system  of  dis- 
tribution, 301,  309,  320,  346, 
353;  and  economic  liberty, 
334,  3435  industrial  success 
personal,  not  social,  305. 

Industrial  education,  78-79;  and 
unions,  24;  as  solution  of  pov- 
erty, 74. 

Initiative  and  referendum,  316- 
318. 

Interest,  why  paid,  136-139; 
tendency  to  fall,  142-144. 

Knapp,  M.  A.,  200. 

Labor,  productivity  of,  15,  16, 
19;  community  of  interest  of, 
and  employer,  22;  competition 


between  different  laborers,  51; 
organization  of,  necessary,  235, 
256;  solution  of  wages  problem 
in  monopoly,  239,  253;  mo- 
nopoly of,  234;  labor  vote,  322. 
See  Monopoly  and  Wages. 

Labor  legislation,  in  interest  of 
unions,  12;  in  aid  of  wages, 
105,  107. 

Labor  unions  based  on  monopoly, 
4,  6,  8,  13,  279-283;  limited  in 
membership,  5,  65;  not  strict 
monopoly,  243,  283;  discrimi- 
nation of,  against  non-union 
men,  8-9;  maintain  monopoly 
by  force,  9;  artificial  monopoly 
of,  244,  253,  254,  260,  261,  283, 
293, 343;  natural  monopoly  of, 
245, 255, 262;  objective  of,  239; 
economic  functions  of,  283; 
ethical  code  of,  9;  oppose  doc- 
trine of  equal  rights,  10;  and 
human  rights,  343;  to  estab- 
lish just  system  of  distribu- 
tion, 278,  288;  and  political 
influence,  11-12;  interference 
of,  with  management,  13,  14; 
closed  shop,  243;  in  restraint 
of  trade,  279;  and  anti-trust 
laws,  240,  280,  281.  See  Mo- 
nopoly. 

Laissez-faire,  355. 

Land,  nationalization  of,  62; 
would  not  help  poor,  63-64. 

Land  ownership,  based  on  social 
utility,  135-136. 

Lasalle,  338. 

La  Salle,  156,  157,  159,  160. 

Liberty,  economic,  324;  to  in- 
dividual under  law,  325,  331, 
354-356;  religious,  326;  polit- 
ical, 327,  330. 

Loyola,  93. 


358 


INDEX 


Malthus,  T.  R.,  131. 
Managerial  ability,  necessary  in 

industry,  160-161;  earns  large 

wages,  163. 

Marx,  Karl,  47,  113,  292,  338. 
Mill,  J.  S.,  63, 122,  126,  284. 
Minimum  wages,  256-260,  314, 

344- 

Mitchell,  John,  256,  278,  280. 

Monopoly  of  labor,  234;  and 
competition  denned,  242;  arti- 
ficial, basis  of  labor  unions,  4, 
6,  8,  244,  253,  254,  260,  261, 
283,  293,  343;  natural,  of 
skilled  labor,  18,  245,  255,  262; 
unescapable,  246;  effective- 
ness of,  247,  279;  contrary 
to  law,  241;  as  solution  of 
wages  problem,  239,  253. 

Opportunity,  equal,  335-337;  so- 
cialism opposed  to,  337,  339. 

Parkman,  156. 

Peabody,  George,  172-173. 

Philanthropy,  sphere  of,  349. 

Population,  law  of,  129-134;  and 
standard  of  living,  133-134. 

Poverty,  problem  of,  and  indus- 
trial education,  74;  require- 
ment for  solution  of,  76;  as  at- 
tacked by  social  settlements, 
96. 

Prices,  agricultural,  251;  and  in- 
creased production  of  gold, 
250,  note;  effect  of  increased 
wages  on,  248-252,  253. 

Production,  laws  of,  examined, 
126-128. 

Profit-sharing,  65. 

Property,  private,  opposed  by 
Socialists,  28, 47;  by  industrial 
democracy,  309;  the  will  of  the 


race,  43;  judged  by  results, 
43-44;  disadvantages  of,  44- 
45;  rights,  341. 

Psychology,  as  related  to  eco- 
nomics, 71-72. 

Rae,  158. 

Railways,  313.    See  Valuation  of 

railways. 
Rights,  of   man,    336,  342;    of 

property,  341;  human,  342. 
Ripley,  E.  P.,  195. 
Roosevelt,  President,  198. 

Salvation  Army,  solution  of  pov- 
erty, 73- 

Saving,  promoted  by  Christian- 
ity, 123-128;  necessary  for 
capital,  126-127.  See  Capital, 
origin  of. 

Self-sacrifice,  Christian  and  eco- 
nomic virtue,  123-128. 

Smith,  Adam,  122. 

Social  discontent,  57-58,  264, 
276;  remedy  for,  293-296. 

Social  justice,  300-302,  314,  332- 
334;  and  taxation,  315;  op- 
posed by  socialism,  338-340. 

Social  settlements,  origins  of,  92; 
amis  and  methods,  93-96; 
have  no  organized  strategy, 
97-98;  qualifications  of  di- 
rectors of,  103-104;  affect 
standard  of  living,  107-108; 
test  principles,  no;  and  social- 
ism, in;  and  immigrants, 
112;  and  organized  charity, 
119;  what  they  can  accomplish, 
119. 

Socialism,  primarily  idealistic, 
25;  and  yet  materialistic,  26, 
303;  incentives  to,  338;  and 
capital,  266;  opposes  compe- 


359 


INDEX 


tition  and  private  property, 
28,  47;  aims  of,  310;  claims 
distribution  unjust,  30-31,  288, 
291;  opposed  to  social  justice, 
338-340;  opposed  to  equal  op- 
portunity, 337,339;  imprac- 
ticable without  change  in  hu- 
man nature,  33-34;  cannot 
banish  inequalities,  34-35;  rad- 
ical weakness  of,  36;  fundamen- 
tal error  of,  339;  futility  of, 
352;  vague,  290;  a  philosophy 
of  failure,  37-38;  no  uniform 
programme  of,  48;  to  seques- 
ter only  things  having  social 
character,  289;  has  not  been 
useless,  55;  and  social  settle- 
ments, in. 

Spargo,  288. 

Standard  of  living,  promoted  by 
efficiency,  21;  and  population, 

133-134. 
State  interference,  maxim  for,  54, 

355- 
Surplus  value,  49. 

Taxation,  and  social  justice,  315. 
Toynbee,  Arnold,  101,  108. 
Toynbee  Hall,  92,  93,  108,  109. 

Unearned  increment,  46,  296;  of 
a  railway,  188,  189. 

Unions.    See  Labor  unions. 

Unrest,  causes  of,  235.  See  So- 
cial discontent. 

Valuation  of  railways,  commer- 
cial, 181,  183,  196,  197;  physi- 
cal, 181,  183, 198,  200,  202;  in- 
dependent of  rates,  199,  200; 
earnings  due  to  franchises,  184, 
190,  195,  197;  meaning  of 


franchises,  187;  railway,  mo- 
nopoly situation  of,  185;  risks 
of  investment  in  railways,  186; 
the  unearned  increment  of  a 
railway,  188,  189;  railway  and 
the  farmer,  188-191;  railway 
rates  vary  inversely  with  valu- 
ation, 192,  198;  conditions  af- 
fecting rates,  201;  railway 
earnings  in  relation  to  mana- 
gerial ability,  192-196,  198; 
railways,  overcapitalization  of, 
196,  202;  railway  discrimina- 
tions, 200;  taxation  of  rail- 
ways, 203. 
Vanderbilt,  Cornelius,  166-167. 

Wages,  affected  by  efficiency  of 
labor,  16,  19,  23,  75,  85,  286, 
348;  of  skilled  labor,  18;  and 
output,  287;  unequal,  since 
men  differ,  334;  effect  of  in- 
creased, on  prices,  248-252, 
253,  and  high  cost  of  living, 
237,  258;  the  largest  share  in 
distribution,  50;  of  women,  79, 
152;  aided  by  legislation,  105, 
107;  minimum,  256-260,  314, 
344;  determined  by  demand 
and  supply,  106;  and  character, 
149-150;  of  management,  141; 
remedy  for  low  wages,  234, 
262,  285,  350.  See  Labor. 

Want,  human,  a  stimulus  to  pro- 
duction, 67. 

Wants  of  poor  should  be  en- 
larged, 68;  should  be  im- 
proved, 69. 

Washington,  Booker  T.,  67. 

Wealth,  inequality  of,  causes  dis- 
content, 57-58;  gives  chance 
for  socialism,  59. 

Wilson,  President,  246. 


360 


INDEX 


Women,  in  new  community  ex- 
istence, 207;  characteristics  of, 
in  earlier  time,  209;  effect  of 
increase  of  wealth  on,  211; 
characteristics  of,  at  present 
day,  212-222;  display  of  su- 
periority, 213;  striving  for  so- 
cial position,  215,  227,  230; 
code  of  ethics  in  society,  216; 
idleness,  mark  of  social  emi- 


nence, 217;  independence  of, 
218,  226;  self-indulgence  of, 
220,  228;  lack  of  proper  edu- 
cation of,  221,  224;  extrava- 
gance of,  223,  229;  religious 
dogma,  225;  riches  and 
birth-rate,  226;  divorce,  227; 
remedy  in  higher  ideals, 
231. 
Women  and  wealth,  205. 


361 


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